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Friday, February 12, 2021 / 10:22 AM / by Axel Van Trotsenburg / Header Image Credit: World Bank
The world
is now a full year into the COVID-19 pandemic-both the health emergency and the
global economic crisis it has generated. Its impacts have touched every person
in every country, causing illness and death, disrupting livelihoods, and
potentially pushing an estimated 150 million more people into extreme poverty
around the globe by the end of 2021. And while the rapid development of
vaccines offers all of us some hope, we know that the pandemic will continue to
dominate our lives in 2021.
Although we
are far from the end of this crisis, it's worth taking a look at where we are
now and what needs to happen next. Recently I joined a roundtable on the World
Bank's Development Podcast to take stock of the early progress and ongoing
challenges in the global response to the coronavirus. I'd like to share a few
takeaways from that discussion.
For the
World Bank Group, a critical lesson from the first phase of response is that we
have to be fast and decisive in bringing massive support to our clients in developing
countries. The World Bank has stepped up
to this challenge in the past year. Our programs, normally in the range of $42
billion per year, grew last year to $71 billion. We have developed specific
COVID-related operations to the tune of $25 billion. We've also sped up our
support through IDA, our fund for the poorest countries, which operates on a
three-year cycle. And many existing World Bank projects have been restructured
to support the response.
"The
World Bank Group and many other organizations are committed to doing all we can
to get the new vaccines to the people of developing countries."
But the
needs are much bigger than this for low- and middle-income countries, as they
tackle COVID and start working toward recovery. The industrialized countries
have spent up to 15–20% of their GDPs on stimulus packages, whereas for
emerging markets it's more like 6%, and the poorest countries, less than
2%. To help these countries at the scale
they need, the Bank Group will require substantial new resources, including
from the donor community.
Since May
2020, we've also been helping the poorest countries through the Debt Service
Suspension Initiative (DSSI), in partnership with the IMF and the G20. This is
freeing up significant resources for governments, so that they're better able
to combat the virus while they keep other critical services operating. But we
recognize that this is only a start, because many creditors, particularly
private creditors, are not participating.
What DSSI
has highlighted is a more fundamental concern that this global crisis demands
more international solidarity and more international action. Since the pandemic
is affecting every country simultaneously, there's a risk that wealthier ones
will stay focused mainly on their own crisis and recovery. This is perhaps
understandable, as every government is accountable to its own people. But it
makes it more likely that poorer countries will be left behind.
The COVID
vaccines illustrate this risk very clearly. The World Bank Group and many other
organizations are committed to doing all we can to get the new vaccines to the
people of developing countries. This
includes using COVAX, a mechanism that the international community has set up
to ensure global, equitable access to vaccines for major infectious diseases.
But at this early stage, the industrialized countries have bought up most of
the supply of the COVID vaccines, leaving developing countries with
insufficient coverage.
While
vaccine distribution is now as urgent as the health emergency itself, we also
need to address the pandemic impacts that could affect developing countries for
the long term. A prime example is
education: COVID is putting children out of school worldwide, as well as forcing
a shift to distance learning that widens inequities for those who can't access
it. This situation could last for two or even three years, and there is
evidence that fewer children are returning where schools have reopened. Hence,
it's no exaggeration that the world is at risk of a lost generation, with young
people's learning losses reducing their earning potential for the long term-and
lowering economic output for decades to come.
With the
challenges so immense, where should the World Bank Group and partner countries
focus our efforts going forward? What offers the most hope for a sustainable
recovery? On the long road ahead, developing countries have some opportunities
to think differently about their economies as they rebuild. This includes policies and reforms that
expand economic participation, that leverage technology for more robust and
inclusive delivery of key services-including health, education, and social
protection-and that make it easier for the public and private sectors to work
together toward development goals. Recovery efforts can also advance countries' climate commitments, with more jobs in emerging, greener sectors.
The
developing countries are the most vulnerable in this global crisis, and they
face the steepest path back. The World Bank Group remains committed to helping
them secure the financial resources and sustained international support that
they will need. We are all in this together, and I remain optimistic that we
will see real improvement in many countries during 2021.
About the Author
Axel
van Trotsenburg is the World Bank Managing Director of Operations
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