IMF COVID-19 Response a Step Forward on Health and the Poor, Short on Climate Protection

 

As the COVID-19 pandemic passes the six-month mark, it is important to assess the global economic recovery process to date and adjust where possible.

For emerging markets and developing countries, the International Monetary Fund is perhaps the most important global institution for navigating this economic and public health crisis. Indeed, the IMF is the only multilateral institution that can reliably provide the much needed financing to grant countries enough fiscal space to address the coronavirus, protect the vulnerable, and kick start a recovery. And they’ve been hard at work – since March 2020, the IMF has approved over 101 programs in 80 countries, a financial approval of upwards of $88 billion.

Recently, the IMF has emphasized support for public health, protecting vulnerable people, and greening the economic recovery in its speeches and official guidances. But to what extent have the unprecedented number of disbursements issued so far accounted for these priorities?

A new study from Boston University Global Development Policy Center (GDP Center) and the United Nations Conference on Trade and Development (UNCTAD) has created an IMF Covid-19 Recovery Index, coding the IMF response programs based on the extent to which they recommend or condition borrowing countries increase efforts on public health, protect the vulnerable, and stage a green recovery.

The Index demonstrates that while many IMF programs are encouraging emergency measures for public health and protecting the vulnerable, support for a green recovery has been very limited. These shortcomings will have impacts for years to come on the macro and micro levels, as both international and local communities navigate the twin crises of climate change and pandemic recovery.

The IMF COVID-19 Recovery Index is based on research conducted by the GDP Center’s Director Kevin P. Gallagher along with Franco Maldonaldo Carlin, a Pre-Doctoral Fellow at the GDP Center,  and published in the academic journal, COVID Economics. The authors analyzed each IMF program—focusing on the IMF Country Reports related to each program, the IMF Staff Report and the Country’s Letter of Intent (LOI) sent to the IMF by the country authorities, for endorsements, recommendations, and conditioning of public health, protecting the vulnerable, and a green recovery. Each of the three program criteria was then assigned a composite score between 0-3 and each program an aggregate score that equally weighs each criterium.

On a scale of 0 to 3, a program is coded as ‘0’ if the Country Letter of Intent does not request or address the need of the three criteria of the recovery. A program is coded as ‘1’ if the LOI requests to address one of the three criteria, but was then not highlighted or acknowledged by the IMF in staff and subsequent reports. Programs are coded as ‘2’ if the IMF, through their staff reports, highlights, acknowledges, and/or explicitly endorses at least one criterium be addressed by the country. Finally, a program is coded as a ‘3’ if the IMF, through staff reports recommended a criterium be addressed, or conditioned the accomplishment of at least one criterium in order to obtain disbursement.

The composite score for all IMF programs is 1.82 out of 3, dragged down by a lack of commitment to a green recovery.

On public health, the IMF composite score was 2.39 out of 3 for encouraging health spending and increase the supply of medical devices in programs in Bolivia, Ghana, Gabon, Bosnia and Herzegovina, and the Dominican Republic. 

 Additionally, the IMF composite score for protecting the vulnerable was 2.65 out of 3, thanks to programs that recommended strengthening safety nets in Cameroon, increasing spending in Bolivia, wage support in Bangladesh, and highlighting a food supply program in the Bahamas.

 Conversely, the IMF scored a dismal 0.42 out of 3 for supporting a green recovery. While some climate-friendly measured were adopted as part of programs with the Bahamas and Bangladesh, the overwhelming majority of IMF programs lack a green recovery component, despite the rosy rhetoric. 

Indeed, the vast majority of countries with IMF COVID-19 response programs do not address climate or a green recovery at all. Countries with scores of ‘0’ for this criterium include Guatemala, Honduras, Haiti, Colombia, Panama, Peru, Chile, Paraguay, Bolivia, Ecuador, Mauritius, Senegal, Guinea, Sierra Leone, Liberia, Cote d’Ivore, Ghana, Mali, Burkina Faso, Cameroon, Chad, Gabon, Central African Republic, South Africa, Lesotho, Eswatini, Mozambique, Malawi, Madagascar, Uganda, Rwanda, Kenya, Somalia, Ethiopia, Egypt, Jordan, Armenia, Montenegro, Albania, Bosnia and Herzegovina, Moldova, Ukraine, North Macedonia, Kosovo, Uzbekistan, Kyrgyzstan, Tajikistan, Pakistan, Afghanistan, Mongolia, Myanmar, Nepal and Papua New Guinea.

Many, if not all, of the nations listed above have already begun to experience the perilous impacts of climate change, which also threatens the health and economic well-being of billions around the world. It is imperative that IMF programs at minimum do no further harm, but in times like this, the IMF should be helping combat climate change and the coronavirus hand in hand.

Relatedly, researchers have pointed to the troubling nexus of climate change and the spread of future pandemics. According to Dr. Aaron Bernstein, director of Harvard University’s T.H. Chan C-CHANGE program, climate change increases the risk and spread of pathogens. “Future risks are not easy to foretell, but climate change hits hard on several fronts that matter to when and where pathogens appear, including temperature and rainfall patterns,” Bernstein said. “To help limit the risk of infectious diseases, we should do all we can to vastly reduce greenhouse gas emissions and limit global warming to 1.5 degrees.”

Given the present and likely future risks climate change poses to public health, vulnerable people, economic growth and financial stability, it is imperative that the IMF and other international financial institutions insist on support for a green recovery from national governments for disbursements.

While the IMF has done considerable work in these past six months in the areas of public health and vulnerable people; the world’s people cannot afford to wait for the next disaster’s response programs to incorporate support for a green recovery.

The IMF COVID-19 Recovery Index is based on research conducted by Kevin P. Gallagher and Franco Maldonado Carlin, published in the journal of COVID Economics.

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