According to a new Rockefeller Foundation report due out on Tuesday, actions to bolster the International Monetary Fund’s (IMF) emergency reserves could provide the $44 billion needed to vaccinate 70% of the population in lower- and middle-income countries by the end of 2022 at no additional cost to rich countries.
Finance officials from the Group of 20 leading economies are expected to support a $650 billion new IMF Special Drawing Rights (SDR) allocation this week to aid countries in dealing with the pandemic and its economic consequences.
SDRs are additional foreign exchange reserves that the International Monetary Fund (IMF) uses to make emergency loans. Countries with balance-of-payments deficits can swap SDRs for widely traded currencies with other IMF members to meet short-term needs.
According to the IMF and other researchers, vaccination rates and economic growth vary greatly around the world.
Rich countries should reallocate their new SDRs to close the funding gap and get more people vaccinated around the world, according to the Rockefeller study, avoiding virus mutations that could stymie global economic recovery.
According to a new paper by the World Bank and the International Monetary Fund, Africa alone will need around $12 billion in COVID-19 vaccines to achieve adequate levels of inoculation to stop virus transmission.
The paper, which was released on Monday, argued for extending the Group of 20’s debt service moratorium until the end of the year, citing developing countries’ continued high liquidity needs and declining capacity to service their debts.
However, it stated that additional resources would be required, noting that the sum required was roughly equal to the total amount of official debt service payments already deferred by 45 of the world’s poorest countries as part of the G20’s Debt Service Suspension Initiative (DSSI).
As of the end of March, high- and upper-middle-income countries accounted for 86 percent of COVID-19 shots administered worldwide, according to the Rockefeller survey. According to the study, advanced economies should plan to reallocate at least $100 billion in SDRs to support low and middle-income countries with vaccinations and other steps.
New SDRs could be pledged to the IMF’s Poverty Reduction and Growth Trust, which provides loans to 63 low-income countries, but they could also be provided to 16 approved organizations, including the World Bank, which could make them more widely available via low- or no-interest loans.
Another choice, according to the study, is for certain institutions to use re-allocated SDRs to back the issuance of bonds earmarked explicitly for pandemic response and vaccination campaigns.