Nobel Prize Economists Call for Vaccines and Debt Relief | Business and economic news

Nobel Prize-winning economists Joseph Stiglitz and Michael Spence call for urgent action to help poorer countries recover from the economic ravages of the coronavirus pandemic, including measures to advance the equity in vaccines, debt relief and strengthening fiscal resources for cash-strapped countries.

The proposals were set out in a new interim report released Thursday – the first anniversary of the global pandemic – by the Institute for New Economic Thinking’s Commission on Global Economic Transformation, co-chaired by Stiglitz and Spence.

“Extraordinary times call for extraordinary measures,” Spence said in the report. “Without bold action, developing countries could be on the verge of wasting years, if not decades, of progress in the post-pandemic world.”

Highlighting the interconnected nature of the global economy, the report urges countries to suspend or change intellectual property protections for COVID-19 injections, treatments, tests and products to speed up vaccine production, get more vaccinated people earlier – including in rich countries – and stay ahead of change.

“In developing countries, many of them are not expected to receive vaccines for years to come, unless we change what happens,” Stiglitz told reporters at a virtual press conference for start the report.

“The world will not be safe from the pandemic itself until the pandemic is controlled all over the world, so in that sense it is even in our own interest that there is a rapid spread of the pandemic. vaccines and other drugs, mass tests that help control the pandemic, ”he added.

World Trade Organization talks this week saw richer countries block an effort by dozens of other countries to temporarily waive intellectual property protections for COVID-19 vaccines.

Opponents of such measures, including the United States Chamber of Commerce, argue it would hamper the development and distribution of vaccines and treatments for future pandemics.

But the report notes that large pharmaceutical companies have received massive government support for COVID-19 vaccine research and development, and in some cases have nearly all of their research and development costs covered by taxpayer funds.

“What we have seen over the last few months is a very inappropriate vaccine intake from wealthy governments, which have essentially reserved around 85% of the global supply for 2021,” Jayati Ghosh, member of the Commission on global economic transformation and professor of economics at the University of Massachusetts at Amherst, told reporters at the press conference.

“Some countries have set aside multiple multiples of their population for vaccines, between four and ten times the number they would actually need, meaning that developing countries have not only been left out, but are unlikely to they receive vaccines, sometimes, in some cases, until 2023-24, ”she added.

Strengthening fiscal resources and debt relief

The report commends governments for throwing away their political rule books and doing “whatever it takes” to spend big to consolidate economies and throw lifelines for those hardest hit by the pandemic.

But it also highlights the marked disparities between nations in terms of the fiscal firepower deployed. Developed countries are expected to have invested $ 9,836 per person in stimulus spending, compared to $ 17 per person for least developed countries, according to estimates by the International Monetary Fund (IMF) in January.

To help give poorer countries more “fiscal space” to fight COVID-19 and its fallout, the report calls for a broad issuance of Special Drawing Rights (SDRs) – a reserve asset (think currency artificial) created by the IMF from a basket of currencies. .

Supporters of SDRs see them as an inexpensive way to build member states’ international reserves in times of extreme stress.

A proposal to create new SDRs at the start of the global pandemic in March 2020 would have met resistance from the United States. But new US Treasury Secretary Janet Yellen backed a new issue.

“This would immediately provide developing countries with an increase in their reserves and allow them to engage in much needed public spending with less concern for the effects on the external balance,” the report said. “It could also provide a means of repayment to countries facing urgent external debt problems.”

Some 120 low-income countries collectively owe $ 3.1 trillion in external debt – a burden that hinders the poorest countries by restraining their ability to spend, according to the report, including those whose debt repayments were manageable before. the pandemic.

“This calamity kind of put them on the brink,” Stiglitz said. “Their debts are beyond their ability to pay, given the magnitude of the global economic downturn and the downturn in some of their countries.

For the hardest hit countries, the report calls for “not only a debt moratorium, which simply turns the can on while increasing the debts of developing countries, but a deep and timely debt restructuring”.

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