A simple way to guarantee an adequate flow of long-run, sustained funding for health surveillance and disease control, and to prepare for the next novel virus in the world’s poor countries, is to create an endowment dedicated to that purpose. A $10 billion endowment could generate income of $500 million a year.
CGD Policy Blogs
In a recently published paper we examine the experience of 45 developing countries (23 emerging and 22 low-income countries) over the 2000-2015 period and find that tax reforms have raised the income share of the poorest population groups within countries.
How should member countries of the OECD's Development Assistance Committee classify their support to private sector investments in developing countries though development finance institutions? Either way, donors have decided that DFIs are in the aid business. And that means that DFIs should follow the principles of effective aid that DAC donors have signed up to.
More World Bank Borrowers Will Need Grants, Not Loans. As a Result, More World Bank Donors Will Need to Pony Up
Rather than providing relief on repayments from existing loans, IDA’s debt sustainability framework adjusts future financing from loans to grants for countries at high risk of debt distress. But what happens to IDA’s loans-to-grants model when a large number of IDA countries trigger the risk thresholds? Can IDA afford its commitment to debt sustainability?
You might find this question odd. After all, since the outbreak of COVID-19, the development finance institutions DFIs have been busy announcing financial goals for crisis response, and offering reassurances of proactive stances. But it is important to recall at this moment that their financial models are not well suited for the purpose of crisis response. In this blog we explore their challenges and suggest how they can stretch and deploy their capital effectively at this moment of global crisis.
Last week Senator Bernie Sanders and Congresswoman Ilhan Omar sent a letter signed by hundreds of lawmakers from 40 countries to the heads of the International Monetary Fund (IMF) and the World Bank, urging them to greatly increase the access of developing countries to financial assistance. They called for a new issue of Special Drawing Rights (SDRs) at the IMF, echoing the earlier plea of Gordon Brown and Larry Summers for at least $1 trillion in new SDRs.
With a Debt Crisis Looming, Researchers Who Estimated China’s “Hidden” Lending Respond to Their Critics
Last year, economists Sebastian Horn, Carmen Reinhart, and Christoph Trebesch put forward estimates of the Chinese government’s external (“overseas”) lending in a working paper. Their work was a landmark effort in a number of respects. Perhaps not surprisingly for a working paper, Horn et al. also attracted critics. In a new note for CGD, Horn et al. respond to this criticism.
Following on from the recently convened meetings of the IMF and World Bank, Masood Ahmed lays out a two track agenda for the COVID-19 financial response.
As low- and middle-income countries are hit by the health and economic effects of COVID-19, the international community is working to mobilize billions of dollars in grants, loans, and debt relief. At the moment, it is difficult to get a full picture of the funding on offer, to whom it is given, and how it will be used.
The COVID-19 pandemic is taking a huge economic toll in low-income countries. The IMF has provided prompt support to help mitigate it, but it could and should do much more. The political commitment of the international community will be essential for the institution to fulfill its potential.