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.
With the global economy going into a steep recession, developing countries are facing considerable financing shortfalls. Confronted with its most severe crisis since WWII, Europe needs to adopt a global perspective, as it cannot successfully address it in isolation. There is a moral imperative to help vulnerable people in distress and foster global solidarity to prevent catastrophic outcomes.
In December 2018, the ETTG published a paper comparing emerging Member State positions for the financing of the EU’s external action under its next Multiannual Financial Framework (MFF), covering the period 2021-2027. Its first observation that negotiations are moving slowly unfortunately still holds today.
The Council of the European Union – on proposition of France and Germany – mandated a Wise Persons Group (WPG) to assess options for a more efficient and sustainable European financial architecture for development. The group published its final report this Tuesday, in which it presents three scenarios for a future European Climate and Sustainable Development Bank. Lennart Kaplan and Benedikt Erforth (DIE) are analyzing and giving a brief blog based on the Wise Persons Group report.