Rich countries hold key to leaders’ chances at World Bank and IMF meetings to stop pandemic and avert $ 9 trillion disaster
Rich countries must pave the way for cheaper mass-produced COVID-19 vaccines to protect everyone in the world and avert a “worst-case” $ 9 trillion global economic catastrophe, Oxfam said today. They are also expected to agree this week to inject an additional $ 650 billion into the global economy to help developing countries cope with the already devastating effects of the pandemic.
The two issues – one around tackling the chronic global vaccine shortage that is now sparking trade disputes and economic shocks between countries, and the other around agreeing to a new allocation of Special Drawing Rights (DTS) – will be presented to the World Bank and internationally. Spring Monetary Fund (IMF) meetings April 5-11.
Together, these two initiatives would go a long way in ensuring the protection of public health and the economic recovery that people and countries around the world desperately need. Urgent action is needed as COVID-19 continues to climb, mutate and kill while continuing to wreak economic havoc.
Oxfam is urging IMF members not to waste time approving a SDR 650 billion issue – enough for low-income countries to almost double their health spending for a year. It would be a much appreciated decision and the culmination of pressure from civil society and others on member countries to do the right thing.
However, Oxfam has warned that the current approach to the global production and distribution of COVID-19 vaccines falls short of meeting needs.
Anna Marriott, public health officer for Oxfam, who is part of the Popular Alliance for Vaccines, said: “Rich countries defend the interests of the pharmaceutical sector vis-à-vis other companies and their economy as a whole. It is a bizarre act of financial and economic self-harm. They condemn everyone, including their own citizens, to suffer the consequences. “
Oxfam, along with other members of the People’s Vaccine Alliance, calls for an end to ‘vaccine apartheid’ which sees rich countries vaccinating one person per second while many developing countries have yet to administer a single dose. The Alliance calls on US President Joe Biden and other leaders of rich countries to show immediate support for lifting pharmaceutical monopolies and intellectual property rules to enable a massive increase in global immunization.
The International Chamber of Commerce estimates that vaccine inequality today could cost the world an estimated $ 9.2 trillion in economic losses, in a worst-case scenario, with rich countries taking half of that blow. Based on the results of this study, Oxfam calculates that these losses are equivalent to:
- The United States could lose up to $ 2,700 per person in household spending in 2021, $ 1,300 more than the recent stimulus check each received from President Biden’s administration. Overall, the United States could lose up to $ 1.3 trillion in GDP due to its share of the cost of vaccine inequality.
- The UK could face a loss of $ 1,380 in spending for each person. Likewise, a loss of $ 1,239 in 2021 per person in France, roughly the equivalent of a monthly rent bill.
- Per capita losses in household spending in Japan and Italy in 2021 could amount to about $ 1,451 and $ 1,495, respectively.
- Canadians could lose $ 1,979 in spending this year due to global vaccine inequalities.
Yet these same rich countries are among those now opposing moves by India and South Africa at the World Trade Organization (WTO) to break the monopolies of big pharmaceutical companies, a move that would help other manufacturers to mass-produce more and less expensive vaccines.
“The US, UK, Germany, France, Japan and Italy could lose up to $ 2.3 trillion in GDP this year unless they stop fighting over name of a handful of large pharmaceutical companies to retain the intellectual property of the vaccine – despite that status. quo clearly failing them and everyone else, ”Marriott said. “It absolutely ignores belief.”
Vaccine inequality hits low- and middle-income countries even harder:
- India could lose up to $ 786 billion, or more than 27%, of its GDP due to global vaccine inequalities.
- South Africa could see 24% wipe out its GDP, losing the equivalent of nearly $ 874 per person in household spending in 2021.
- Meanwhile, the Philippines could be deprived of 18% of its GDP this year due to inequity in vaccines, which equates to around $ 450 per person in household spending.
“It’s a stark reminder that vaccine inequality has a real economic impact on all of us, even if a solution faces our leaders. The richest people can cope better with this cost, but every person, in every country of the world, is expected to pay and struggle – the poorest people above all, ”Marriott said.
“A popular vaccine is possible if WTO members relinquish the intellectual property of these companies, as demanded by India, South Africa and nearly 100 other countries, and vaccine science and technology are shared through the WHO Coronavirus Technology Access Pool (C-Tap). Countries around the world, including the wealthiest G20, are coming together this week to discuss the global economic and health crisis, making it a perfect time for a breakthrough, ”Marriott said.
The World Bank’s $ 12 billion envelope for developing countries for the purchase and distribution of vaccines will also be on the agenda for the week. “As welcome as it is, a large chunk of that $ 12 billion is on loan to countries, taking them more into debt at a time when they can least afford it,” said Nadia Daar, Oxfam’s bureau chief at Washington DC.
Vaccine costs are set unreasonably high for many countries due to vaccine monopolies. At the price Uganda paid for its vaccines, Oxfam estimates that it would cost more than double the country’s health budget to immunize everyone. “Unless pharmaceutical monopolies are canceled to stimulate supply, the bank’s $ 12 billion will quickly run dry to pay for a fraction of the doses of vaccines needed.”
Regarding a possible new allocation of SDRs, Daar said: “SDRs are the fastest and most secure way to provide much-needed liquidity to developing countries which, unlike richer countries, do not have everything. simply couldn’t afford to deploy the trillion dollar COVID-19. emergency plans to revive economies and boost health systems. Basically, it is money that never has to be repaid and that will not put countries further into debt.
“A new SDR allocation can be made very quickly – it only took a few months to inject $ 250 billion SDR into the global economy in 2009. If sufficient progress is made during the spring meetings, this money could save lives and livelihoods. before the end of the summer, ”Daar said.
$ 650 billion in SDRs would provide about $ 22 billion in additional reserves to the world’s poorest countries and $ 228 billion to middle-income countries. It is a crucial lifeline but will not be nearly enough. The IMF estimates that low-income countries will need to deploy $ 200 billion over five years just to fight the pandemic. “We urgently need rich countries to reallocate their SDRs to support low-income countries, act on debt cancellation and increase their aid commitments, including through the replenishment of the International Association of development of the Bank, ”added Daar.
Notes to Editors
The spring 2021 meetings of the World Bank and IMF will take place virtually from April 5 to 11. G20 finance ministers and central bank governors will meet on April 7-8. The International Monetary and Financial Committee (IMFC) will discuss SDRs on April 8.
A study commissioned in January 2021 by the International Chamber of Commerce (ICC) Research Foundation, found that the global economy could lose up to $ 9.2 trillion if governments fail to ensure access to developing economies to COVID-19 vaccines.
Vaccination rate country by country: Our World in Data, accessed March 29, 2021, and World Bank country classifications. Oxfam calculations.
Download Oxfam’s methodological calculations of household loss.
More than 200 groups have called on the G20 to support the creation of $ 3 trillion in SDRs.
The IMF approved its last SDR allocation of $ 250 billion in August 2009, following the global financial crisis.
Read Oxfam’s latest blog at how the World Bank can promote a fairer and faster global deployment of vaccines.
Download ‘Behind the numbers‘, Oxfam’s updated expenditure, liability and recovery data set included in IMF COVID-19 loans.