Rich countries hold key to leaders’ chances at World Bank/IMF meetings of halting pandemic and averting a US$9 trillion catastrophe
Rich countries must open the way to cheaper mass-produced COVID-19 vaccines in order to protect every person in the world and avert a $9 trillion “worst-case” global economic catastrophe, said Oxfam today. They should also agree this week to inject $650 billion more into the global economy to help developing countries cope with the pandemic’s already devastating effects.
The two issues —one around tackling the chronic global scarcity of vaccines that are now sparking trade disputes between and economic shocks among countries, and the other in agreeing to a new allocation of Special Drawing Rights (SDRs)— will feature at the World Bank and International Monetary Fund’s (IMF) Spring Meetings April 5-11.
Together, these two initiatives would go a long way towards providing the public health protection and economic stimulus that people and countries all over the world desperately need. Urgent action is needed as COVID-19 continues to spike, mutate and kill whilst continuing to wreak economic havoc.
Oxfam is urging IMF members to waste no time in endorsing a $650 billion SDR issuance —enough for low-income countries to nearly double their healthcare spending for a year. This would be a highly welcome move and the culmination of pressure that civil society and others have been applying to member countries to do the right thing.
However, Oxfam warned that the current approach to the global production and distribution of COVID-19 vaccines is falling far short of what is needed.
Anna Marriott, Public Health Manager for Oxfam, which is part of the People’s Vaccine Alliance, said: “Rich countries are defending the interests of the pharmaceutical sector over other businesses and their economies as a whole. It is a bizarre act of financial and economic self-harm. They are condemning everyone including their own citizens to suffer the consequences.”
Oxfam, with other members of the People’s Vaccine Alliance, is calling for an end to ‘vaccine apartheid’ which is seeing rich nations vaccinate one person a second whilst many developing nations have yet to administer a single dose. The Alliance is calling for US President Joe Biden and other rich country leaders to show immediate support for the lifting of pharmaceutical monopolies and intellectual property rules to enable a huge scale up in global vaccination.
The International Chamber of Commerce estimates that vaccine inequality at today’s scale could cost the world around $9.2 trillion in economic losses, in the worst-case scenario, with rich countries suffering half of that blow. Drawing on the findings of this study, Oxfam calculates that these losses are equivalent to:
- The United States could lose up to $2,700 per person in household spending in 2021, which is $1,300 more than the recent stimulus cheque that each received from President Biden’s administration. Overall, the US could lose as much as $1.3 trillion in GDP as its share of the cost of vaccine inequality.
- The UK could face up to a $1,380 loss in spending for every person. Similarly, a $1,239 loss in 2021 per person in France, roughly equivalent to a monthly rent bill.
- Per capita losses in household spending in Japan and Italy in 2021 could amount to around $1,451 and $1,495 respectively.
- Canadians could miss out on $1,979 this year in spending as a result of global vaccine inequalities.
Yet these same rich countries are among those now opposing moves by India and South Africa at the World Trade Organization (WTO) to break open the monopolies of big pharmaceutical companies, a move that would help other manufacturers to mass-produce more and cheaper vaccines.
“The US, UK, Germany, France, Japan and Italy together could lose as much as $2.3 trillion in GDP this year unless they stop fighting on behalf of a handful of big drug companies to retain the intellectual property of the vaccine —despite this status quo plainly failing both them and everyone else,” said Marriott. “It totally beggars belief.”
Vaccine inequality is hitting low- and middle-income countries even harder:
- India could lose as much $786 billion, or over 27 percent, of its GDP due to global vaccine inequities.
- South Africa could see 24 percent wiped off its GDP, losing the equivalent of nearly $874 per person in household expenditure in 2021.
- The Philippines meanwhile could be stripped of up to 18 percent of its GDP this year due to vaccine inequity, equivalent to around $450 per person in household spending.
“This is a stark reminder that vaccine inequality has a real economic impact on us all, even as a solution stares our leaders in the face. The richest people can cope better with this cost but every person, in every country in the world, is being expected to pay and struggle —the poorest people most of all,” Marriott said.
“A People’s Vaccine is possible if WTO members waive these companies’ intellectual property, as India, South Africa and nearly 100 other countries are demanding, and the vaccine science and technology are shared through the WHO’s Coronavirus Technology Access Pool (C-Tap). Countries from around the world, including the richest G20, are meeting this week to discuss the global economic and health crisis which makes this a perfect moment for a breakthrough,” Marriott said.
On a possible new SDR allocation, Daar said: “SDRs are the quickest, surest way to provide much-needed liquidity to developing countries which, unlike the wealthiest countries, simply haven’t been able to afford to deploy trillion-dollar COVID-19 relief plans to revive economies and boost healthcare systems. Crucially, it’s money that never has to be repaid and won’t plunge countries even further into debt.
“A new SDR allocation can be done very quickly —it took just a few short months to inject $250 billion worth of SDRs into the global economy in 2009. If enough progress is made during the Spring Meetings, this money could be saving lives and livelihoods before the end of the summer,” Daar said.
$650 billion worth of SDRs would deliver approximately $22 billion in added reserves to the world’s poorest countries, and $228 billion to middle-income countries. It is a crucial lifeline but won’t be nearly enough. The IMF estimates low-income countries will need to deploy $200 billion over five years just to fight the pandemic. “We urgently need rich countries to reallocate their SDRs to support low-income countries, act on debt cancellation and ramp up their aid commitments including through the Bank’s International Development Association replenishment,” added Daar.
Notes to editors:
- Figures are in USD
- The World Bank and IMF 2021 Spring meetings will take place virtually 5-11 April. G20 Finance Ministers and Central Bank Governors will meet 7-8 April. The International Monetary and Financial Committee (IMFC) will discuss SDRs on 8 April.
- A study commissioned in January 2021 by the International Chamber of Commerce (ICC) Research Foundation found that the global economy stands to lose as much as $9.2 trillion if governments fail to ensure developing economy access to COVID-19 vaccines.
- Country-by-country vaccination rates: Our World in Data, accessed 29 March, 2021, and World Bank country classifications. Calculations by Oxfam.
- Download Oxfam’s methodological calculations for household loss.
- More than 200 groups have called on the G20 to support the creation of $3 trillion in SDRs.
- The IMF approved its last SDR allocation of $250 billion in August 2009, in the wake of the global financial crisis.
- Read Oxfam’s latest blog about how the World Bank can promote a fairer and faster global vaccine roll-out.
- Download ‘Behind the Numbers’, Oxfam’s updated dataset on spending, accountability, and recovery measures included in the IMF’s COVID-19 loans.
Jo Spratt | Communications and Advocacy Director | Wellington, New Zealand | Joanna.firstname.lastname@example.org | 0210664210