Limited fiscal space in many developing countries demands collective efforts and EU leadership to help improve their macro-economic conditions and attract more investments for a higher impact and sustainability for recovery from COVID-19.
On Thursday 29 of October at 16:00 pm (CET) we hosted a webinar event in cooperation with OECD on multilateral development finance in response to the COVID-19 crisis. The webinar investigated the dynamics of the Multilateral Development Finance framework in the wake of COVID-19, and made concrete recommendations on the most effective and impactful ways forward.
This paper looks at what development finance institutions (DFIs), including multilateral development banks, can do to support a gender-sensitive economic recovery from COVID-19.
COVID-19 has exacerbated factors influencing international support for peacebuilding, including a more volatile geopolitical order and changes in domestic priorities in donor countries. Peacebuilding and a conflict-sensitive approach have not yet been at the forefront of the international responses to COVID-19, undermining attempts to ‘build back better’ in a world where negative conflict dynamics are increasingly apparent.
Financial access in Africa has been on the rise in the last decade. It has a critical role to play in increasing the resilience of households and supporting their livelihoods. Maintaining this role is vital to tackle welfare and income losses stemming from the Covid-19-sparked economic crisis.
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.