While the 2008/2009 global economic crisis had many negative consequences, one positive effect was that it massively accelerated international cooperation on tax matters. This is the kind of impetus that we also need for tackling the Covid-19 pandemic. The focus is not on generating more revenues, but rather primarily on achieving greater equity in the way that revenues are generated. This requires more public discussion of fair taxation. After all, the way that resources are mobilised and deployed to tackle the crisis will also have an impact on state legitimacy and social cohesion.
There is not a ‘one-size-fits-all’ solution to respond and recover from the current global health emergency and economic fallout resulting from COVID-19. A combination of pragmatic solutions is needed to face the debt issue and give countries room to make the policy choices and investments that will also lay foundations to recover, putting people and nature at the heart of economic growth and development.
The ‘Team Europe’ approach should be a rallying point for the active engagement of EU member states and financial institutions, to respond to the COVID-19 crisis and achieve the Sustainable Development Goals. While keeping its priorities, notably towards a value-based approach, resilient health systems, a greening of the recovery and digitalisation, the EU should put greater emphasis on food security and sustainable food systems. Moreover, women should have a central place in the EU’s global response 2.0.
Debt relief is back. Again. The “once-in-a-generation” debt cancellation of 15 years ago has returned to the agenda as indebted countries struggle to finance their response to Covid-19. Suspending collection of debt repayments is one practical thing – among others – that rich countries can do relatively quickly to free up money for poor countries during this crisis.
World Bank Group President David Malpass expects the corona crisis to result in a deeper global recession than the Great Depression of the 1930s. The pandemic will hit the world’s poorest countries even harder than industrialised nations, especially as the former have barely any fiscal leeway. Their social-security and healthcare systems are not sufficiently robust.
European Think Tanks Group (ETTG) calls on the EU to look beyond its own economic recovery and to work with Africa as our ‘twin continent’ and ‘closest ally’ to avert the worst effects of the crisis and to craft a new partnership for the longer-term. History has taught us that major crises create opportunities for accelerating social, economic and political reforms. The coronavirus crisis provides an opportunity to finally transform the old paradigm of donor-recipient aid relations towards a model of genuine international cooperation between Europe and Africa.
The international community bears joint responsibility for the world’s poorest countries during this pandemic. For this reason, both temporary, immediate liquidity support and long-term measures that address the root causes of indebtedness are important in order to enable these countries to prevent a financial catastrophe on top of a humanitarian one.
For the second time over the last ten years, low-income economies are confronted with the challenge of overcoming a macro crisis they did not spark and for which they have disproportionally poor capacity to cope with compared to high-income countries. In this context, development finance institutions (DFIs) have an important role to play, both during the crisis and for the recovery.
International development cooperation risks being deeply affected by the global COVID-19 pandemic, with potentially disastrous consequences among fragile states.
As the Coronavirus pandemic expands, and peak contagion remains uncertain, policy responses are gradually emerging, being implemented in a number of domains.
The crisis has several important implications, but two are currently dominating the headlines: individual health and the sustainability of national healthcare systems, and the economic fallout from the pandemic.