Poor nations need help in dealing with virus

As governments struggle to cope with the COVID-19 pandemic, billions of people living in countries teetering on the brink of economic collapse are being threatened further by a looming debt crisis, according to a new UN report, and this matter needs to be addressed in all earnestness.

As the UN-led Inter-Agency Task Force on Financing for Development report suggests, governments must take measures to avert debt overload and address the economic and financial havoc wrought by the pandemic.

With recommendations based on joint research and analysis from more than 60 UN agencies and international institutions, the 2020 Financing for Sustainable Development Report clearly outlines measures to address the impact of the unfolding global recession and financial turmoil – particularly in the world’s poorest countries.

The COVID-19 crisis has shaken global financial markets with heavy losses and intense volatility that has prompted investors to move around $90 billion out of emerging markets – the largest outflow ever recorded.

Particularly alarming for many Least Developed Countries (LDCs) is the prospect of a new debt crisis.

To mitigate this, 2020 Financing for Sustainable Development calls, among other things, suspending debt payments from LDCs and other low-income countries; strengthening the global financial safety net; and reversing the decline in official development assistance.

What is essential is a large-scale, coordinated and comprehensive multilateral response amounting to at least 10 per cent of global GDP.

Despite some hopeful signs in Western nations as well as in China, where the virus was first detected late last year, there are fears the worst is still to come in much of the developing world.

Yemen, which has been experiencing one of the world’s most acute humanitarian crises, on Friday reported its first case.

Brazilian authorities have confirmed the first deaths in the favelas of Rio de Janeiro where crowding and poor sanitation have raised fears of a catastrophe.

There are similar fears in India, where hundreds of millions of poor people are becoming increasingly desperate.

International Monetary Fund (IMF) Managing Director Kristalina Georgieva has already warned that the coronavirus pandemic will push the global economy into the deepest recession since the Great Depression, with the world’s poorest countries suffering the most.

The IMF will release an updated world economic forecast on Tuesday that will show just how quickly the coronavirus outbreak has turned what had been expected to be a solid year of growth into a deep downturn.

Just three months ago, the IMF was forecasting that 160 nations would enjoy positive income growth on a per capita basis. Now the expectation is that over 170 nations will have negative per capita income growth this year.

Emerging markets and low-income nations across Africa, Latin America and much of Asia are at high risk.

With weak health systems to begin with, many face the dreadful challenge of fighting the virus in densely populated cities and poverty-stricken slums, where social distancing is hardly an option, as Georgieva points out.

The point to note is that investors have grown fearful of leaving their money in emerging economies that could be hit hard by a global recession.

Countries that depend on exporting commodities have taken a double blow because of the steep fall in commodity prices.

Georgieva’s indication that the IMF is prepared to commit its $1 trillion in lending capacity to providing support to nations that need help dealing with the pandemic does come as a solace.