The Covid-19 has proved to be a great leveler. The pandemic does not discriminate between the rich and the poor, mighty and the weak, left and right, between religious and ethnic divides, between the erudite and the ignorant and; it is totally blind to the color of skin or geography. The entire world and its inhabitants are today at its mercy.
It is a war against an invisible enemy.
Even the mightiest among nations do not seem to have any weapons in their arsenal to counter the onslaught of the novel coronavirus. As of today mankind has no cure for the malady except locking itself down and curtailing human activity to almost standstill. This is what the world has been doing since the deadly virus first reared its head in China in December, 2019.
But in the process, the global economy has come to a virtual halt, threatening the seven billion or so souls of this world with unthinkable consequences. Already it has taken a toll of thousands and swiftly overwhelmed the health systems of all nations - developed and developing - producing social and economic impacts that seem to be unprecedented in scale.
So far the vaccine that would kill the already dead coronavirus cells has eluded the scientists working over time the world over. But developing vaccines usually takes 10 to 15 years of research before the vaccine is made available to the general public. The first step of this extensive process involves several years of laboratory research, in which scientists and researchers identify an antigen that can prevent a disease.
The world is trying to save as many people as it could using lockdowns of various degrees, strictly observing social distancing, hand washing, preventing large gatherings, using facemasks and gloves wherever indicated and at the same time it is also trying to launch a world-wide campaign to hold the global economy from going into a tailspin.
But as of today it seems you cannot buy even a short reprieve from the deadly pandemic with all the money in the world.
In terms of men and material it is seemingly developing into the costliest war mankind has ever fought.
The world is trying to grapple with the challenge on two fronts simultaneously. On the one hand, it is trying to slow down and finally stop the spread of the deadly virus using the available medical facilities and administrative methods and, on the other it is desperately trying to save the global economy from keeling over by countering the onslaught from a unified platform. Some of the measures that are being discussed loudly over the last several weeks in this regard are the possibility of writing off or suspending the mountain of debt under which the developing countries have been writhing over several decades and formulating some kind of Marshall Plan.
To start with, the World Bank Group, including IFC and MIGA, is contemplating deploying up to $160 billion over the next 15 months to support COVID-19 measures that will help countries respond to immediate health consequences of the pandemic and bolster economic recovery and growth. The broader economic programme is being aimed at shortening the time for recovery, create conditions for growth, support small and medium enterprises, and help protect the poor and vulnerable.
The WB intends to respond forcefully and massively with support programmes, especially for poor countries, involving a significant increase in the provision of highly concessional IDA credits and grants.
Since the fast-track facility was approved on March 17, IFC has committed to 470 transactions in the amount of $545 million in trade finance lines, 54% of which were in low-income and fragile countries and 29% in Sub-Saharan Africa and MENA.
The World Bank has also been working with COVID-related suppliers to share aggregate demand estimates and has developed a streamlined procedure to support countries' procurement of medical supplies and equipment.
David Malpass, the World Bank President, has reiterated once again his call for creditor countries to allow the poorest countries to suspend all repayments of official bilateral credit. He suggested that a stand-still could begin on May 1 and would add critical new liquidity to the large World Bank and IMF support programmes as countries fight the COVID-19 pandemic.
It was further suggested that during the suspension period, the World Bank and IMF could be tasked with consultations and outreach with creditors, borrowing countries, and civil society organizations to evaluate the poorest countries' debt sustainability outlook, including possibly a reduction in the creditor's net present value and participation by commercial creditors.
The World Bank is expected to seek endorsement for the IDA debt relief proposal at the Development Committee meeting of Governors during its virtual Spring Meetings on April 17.
Mari Pangestu, Managing Director of World Bank's Development Policy and Partnerships in a paper she presented on April 8, has maintained that for the poorest countries the full danger was only just coming into view.
"So far, the vast majority of reported COVID-19 infections has been in developed countries-although the numbers in developing countries could rise considerably in the coming months. The economic harm, however, is spreading: simultaneous demand and supply shocks are rippling across borders through their effects on travel, trade, finance, commodity markets, and investor confidence. Seventeen countries with the highest number of COVID-19 cases are vital nodes in global trade networks, magnifying the economic fallout for developing countries.
"The pandemic has already created a global shortage of medical supplies. Increasing restrictions to exports exacerbate the shortages and drive prices up. At the World Bank Group, we recently created a new database to track the effects of such policies. It highlights the vulnerability that developing countries face regarding medical supplies: the 20 developing countries with the highest number of COVID-19 cases derive 80 percent of critical COVID-19 products from just five economies. Our analysis shows, moreover, that current export restrictions are likely to increase prices of medical masks by more than 20 percent. If restrictions escalate, prices would shoot up by over 40 percent.
"Food shortages could be next. That alone should give us pause-because production levels of food staples in 2020 are expected to be near all-time highs. Supply is thus not a problem at this time. But shortages could result from disruptions in supply chains, labor shortages as people become sick, and reduced activity by small and medium enterprises (SMEs)-many of which could go out of business. For example, China's exports of agricultural goods in the first two months of the year declined 12 percent year-on-year.
"Here again a handful of countries are going it alone. Restricting food exports to boost domestic availability is exactly the wrong response under the circumstances. As we learned from the 2008-2011 food crisis, such measures increased global prices by 13 percent on average-and by 45 percent for rice. The poorest countries, which rely heavily on food imports, would be hurt the most. Developing countries on average derive 80 percent of their food imports from just three exporting countries. For fragile and conflict countries the proportion is more than 90 percent, making them even more vulnerable to policy changes by exporting nations.
"In this area, the World Bank is taking on a particularly proactive role: we are offering Bank-Facilitated Procurement (BFP) to help our client countries access critically needed medical supplies and equipment, for no fee. We will assist in identifying existing suppliers with available stock and negotiating prices and conditions. Borrowers will then sign and enter into contracts themselves, including assuring relevant logistics with suppliers. In addition, through our SME lending programmes we are supporting the retooling of production capabilities towards medical goods, where feasible."
Meanwhile, Angel Gurría, OECD Secretary-General in his statement issued on the occasion of G20 virtual summit, has built on his recent call for a "global Marshall Plan" to counteract the pandemic's effects.
To "inoculate" economies to current and future shocks, he urged the G20 Leaders to act immediately, to: Recapitalize health and epidemiological systems; Mobilize all macro-economic levers: monetary, fiscal, and structural policies; Lift existing trade restrictions especially on much needed medical supplies; Provide support to vulnerable developing and low-income countries; Share and implement best practices to support workers and all individuals, employed and unemployed - particularly the most vulnerable; Keep businesses afloat, particularly small and medium-sized firms, with special support packages in hardest hit sectors such as tourism.
The OECD has committed its expertise to support governments in developing effective policies in any sector necessary to slow the pandemic's spread and blunt its economic and societal effects - from health, taxes, labor and employment to SMEs, education, science and technology, trade and investment and more.
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