The World Bank approved an envelope of US$12 billion for developing countries to finance the purchase and distribution of COVID-19 vaccines, tests, and treatments for their citizens - Photo by World Bank Office

JAKARTA (TheInsiderStories) – The World Bank approved an envelope of US$12 billion for developing countries to finance the purchase and distribution of COVID-19 vaccines, tests, and treatments for their citizens, said the agency yesterday. The financing is part of an overall the Group package of up to $160 billion through June 2021 to help developing countries fight the pandemic.

It adds new financing to the World Bank’ COVID-19 emergency response programs that are already reaching 111 countries. This financing package helps signal to the research and pharmaceutical industry that citizens in developing countries also need access to safe and effective vaccines. It will also provide financing and technical support so that developing countries can prepare for deploying vaccines at scale, in coordination with international partners.

“Access to safe and effective vaccines and strengthened delivery systems is key to alter the course of the pandemic and help countries experiencing catastrophic economic and fiscal impacts move toward a resilient recovery,” said World Bank Group president, David Malpass, in an official statement released on Tuesday (10/13).

He asserted, developing countries will have different ways to acquire and deliver approved vaccines. The approach draws on the group’ significant expertise in supporting large scale immunization programs for vaccine preventable diseases, as well as public health programs to tackle infectious diseases such as HIV, tuberculosis, malaria and neglected tropical diseases.

In addition to purchasing COVID-19 vaccines, the World Bank financing will also support countries to access to COVID-19 tests and treatments, and expand immunization capacity to help health systems deploy the vaccines effectively.  This includes supply chain and logistics management for vaccine storage handling, trained vaccinators, and large-scale communication and outreach campaigns to reach communities and households.

The International Finance Corporation, the private sector arm under the group, is also investing in vaccine manufacturers through its $4 billion Global Health Platform. The aim is to encourage ramped-up production of COVID-19 vaccines and therapeutics in advanced and developing economies alike—and to ensure that emerging markets gain access to available doses.

“We will be deploying up to $160 billion in financial support over 15 months to help more than 100 countries protect the poor and vulnerable, support businesses, and bolster economic recovery. This includes $50 billion of new IDA resources through grants and highly concessional loans,” he adds.

External Debt

While, in response to an urgent need for greater debt transparency, the latest edition of the International Debt Statistics (IDS) report provides more detailed and more disaggregated data on external debt than ever before in its nearly 70-year history, including breakdowns of what each borrowing country owes to official and private creditors in each creditor country, and the expected month-by-month debt-service payments owed to them through 2021.

Before, the onset of the COVID-19 pandemic, rising public debt levels were already a cause for concern, particularly in many of the world’s poorest countries as discussed in our Four Waves of Debt report published in December 2019. Responding to a call from the World Bank and the International Monetary Fund, the G20 endorsed the Debt Service Suspension Initiative (DSSI) in April 2020 to help up to 73 of the poorest countries manage the impact of the COVID-19 pandemic.

According to the report, the total external debt of DSSI-eligible countries climbed 9.5% to a record $744 billion in 2019 from the previous year highlighting an urgent need for creditors and borrowers alike to collaborate to stave off the growing risk of sovereign-debt crises triggered by the COVID-19 pandemic. The pace of debt accumulation for these countries was nearly twice the rate of other low- and middle-income countries in 2019.

The debt stock of DSSI-eligible countries to official bilateral creditors, composed by mostly G-20 countries, reached $178 billion in 2019 and accounted for 17 percent of long-term net debt flows to low- and middle-income countries. Within the G-20 creditor group there have been some important shifts characterized by a marked increase in lending by G-20 member countries that are themselves middle-income countries.

For example, China, by far the largest creditor, has seen its share of the combined debt owed to G-20 countries rise from 45 percent in 2013 to 63 percent at end-2019. Over the same period the share for Japan, the second largest G-20 creditor, has remained broadly the same at 15 percent.

The data also reflects progress made to increase coverage of complex debt instruments, given their rising prominence in the debt profiles of developing countries. The central bank and currency swap arrangements that represent loans from other central banks also occur in low- and middle-income countries.

The World Bank is working to ensure that these debt instruments are captured in the IDS dataset. Increased debt transparency will help many low- and middle-income countries assess and manage their external debt through the current crisis and work with policymakers toward sustainable debt levels and terms.

“Achieving long-term debt sustainability will depend on a large-scale shift in the world’s approach to debt and investment transparency,” said Malpass.

According to him, greater debt transparency is critical to productive investment and debt sustainability. The Group has called for full transparency of the terms of the existing and new debt and debt-like commitments of the governments of the poorest countries. It has urged creditors and debtors alike to embrace this transparency—to facilitate analysis that would enable countries to identify sovereign debt levels that are consistent with growth and poverty reduction.

World bank expects to deploy up to $160 billion in financial support over 15 months to help more than 100 countries protect the poor and vulnerable, support businesses, and bolster economic recovery. This includes $50 billion of new IDA resources through grants.

Written by Editorial Staff, Email: theinsiderstories@gmail.com