IMF Weekend Read: Vaccine Policy is Economic Policy

April 9, 2021/IMF

Image Credit: bbc.com

Welcome to the final daily briefing / Weekend Read summary of the 2021 Spring Meetings.

Today’s agenda includes a capacity development talk on digital payment systems, a deep dive into the IMF’s new Climate Change Indicators Dashboard, and an Analytical Corner event looking at climate change. Today’s edition also serves as a summary of key reports, events and happenings of the Spring Meetings. On that note, let’s get started.

📣 But first, please take 60 seconds and share your feedback on the convening and our coverage. Your thoughts will help us shape future events and updates.


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TODAY’S AGENDA (THURSDAY, APRIL 9)

10:00 AM – 10:45 AM:
Capacity Development Talk: Developing Safe, Efficient, and Inclusive Digital Payment Systems

Speakers: Dirk Jan Grolleman, Senior Financial Sector Expert, IMF; Tanai Khiaonarong, Senior Financial Sector Expert, IMF // Moderator: Ann-Margret Westin, Deputy Division Chief, Institute for Capacity Development, IMF

10:00 AM – 11:00 AM:
The IMF’s New Climate Change Indicators Dashboard: Experimental Data for Economic and Financial Analysis

Speakers: Louis Marc Ducharme, Chief Statistician and Data Officer and Director, Statistics Department, IMF; Gabriel Quirós, Deputy Director, Statistics Department, IMF; Alberto Sanchez, Senior Data Analytics Officer, Statistics Department, IMF

11:00 AM – 11:45 AM:
Analytical Corner – Session 4: Climate Change

Speakers: David Corvino, Asia and Pacific Department, IMF; Cristian Alonso, Fiscal Affairs Department, IMF; Tianxiao Zheng, Strategy, Policy, and Review Department, IMF; Paola Morales-Acevedo, Monetary and Capital Markets Department, IMF; Maksym Ivanyna, Institute for Capacity Development, IMF


VACCINE POLICY IS ECONOMIC POLICY

IMF Managing Director Kristalina Georgieva stressed that vaccine policy this year and next will be an even higher priority than the traditional tools of fiscal and monetary policy to ensure a recovery from the crisis. “Without it we cannot turn the fate of the world economy around,” she said in an event on Thursday with US Federal Reserve Chair Jerome Powell; Ireland’s Finance Minister Paschal Donohoe; and World Trade Organization Director-General Ngozi Okonjo-Iweala.

Although the US economy is leading the way in the recovery, Powell recognized that the burden of the crisis is still falling on lower income workers and the unemployment rate in the bottom quartile of earners is still 20 percent.

“Viruses are no respecters of borders and until the world is vaccinated we’re all going to be at risk of new mutations and we won’t be able to really resume activity with confidence all around the world,” he said.

Ngozi warned that global herd immunity will take a long time to achieve with only 0.1 percent of globally administered vaccines going to low-income countries. Ramping up production and distribution is critical.

“If we don’t act fast the rest of the world that has been vaccinated might see the gains they’ve made reversed,” she said.

📺 Watch the full event here.


SUPPORTING THE IMF’S ROLE IN THE RECOVERY

The International Monetary Fund and Financial Committee (IMFC) reaffirmed its commitment to a strong, quota-based, and adequately resourced IMF at the center of the global financial safety net. The group concluded one of its biannual meetings on Thursday with a pledge to calibrate policies and strengthen cooperation to durably exit from the crisis.

“There is a commitment to make sure the IMF is a well-funded institution to be able to take their important role in the center of the global financial safety net,” said IMFC Chair Magdalena Andersson, who also serves as Sweden’s Finance Minister. 

The committee called on the IMF to make a comprehensive proposal on a new Special Drawing Rights general allocation of $650 billion to help meet long-term global need to supplement reserves, while enhancing transparency and accountability.

“We recognize that the global economy is on a firmer footing but we continue to face many challenges, many of which can only be met through stronger international cooperation,” said IMF Managing Director Kristalina Georgieva.

Read the communiqué of the forty-third meeting of the IMFC. 📺 Watch the press conference.


FLAGSHIP REPORT REWIND

WORLD ECONOMIC OUTLOOK

“It is one year into the COVID-19 pandemic and the global community still confronts extreme social and economic strain as the human toll rises and millions remain unemployed. Yet, even with high uncertainty about the path of the pandemic, a way out of this health and economic crisis is increasingly visible,” IMF Chief Economist Gita Gopinath writes in a new blog. However, recoveries are diverging dangerously across and within countries, as economies with slower vaccine rollout, more limited policy support, and more reliance on tourism do less well. 📺 Click here to watch the press conference and read the IMF’s latest World Economic Outlook report. ️ Listen to a new podcast on the report with Malhar Nabar.

Read a blog, based on the analytical chapter 2 of our latest World Economic Outlook, about how countries can slowly heal the economic scars that will result from the crisis. Another blog, based on analytical chapter 3 of our latest World Economic Outlook, explores how policies can lessen the pandemic’s harsh and unequal effects on workers.

GLOBAL FINANCIAL STABILITY REPORT

Global markets are watching the current rise of US long-term interest rates, worried that a rapid and persistent increase may result in tighter financial conditions, potentially hurting growth prospects. The good news is that the rising rates in the United States have been spurred in part by improving vaccination prospects and strengthening growth and inflation. The bad news is that the increase may reflect uncertainty about the future path of monetary policy and possibly investor concerns about the increased supply of Treasury debt to finance the fiscal expansion in the United States, as reflected by sharply rising term premia (investors’ compensation for interest-rate risk). Read the new blog by Tobias Adrian, and read the full report / 📺 watch the briefing. ️ If you have 15 minutes, listen to a new podcast on the report with Fabio Natalucci.

Also, catch up on blogs covering analytical chapters of the Global Financial Stability Report. A blog based on the analytical chapter 2 explains how the easing of financial conditions in response to an economic crisis tends to accelerate buildups in leverage or the ability to borrow, which could cause trouble down the line. Another blog, based on the analytical chapter 3, finds that pandemic’s shift to working from home has clouded the outlook for commercial real estate and potentially threaten financial stability. 

FISCAL MONITOR

“Global vaccination may well be the highest return public project ever identified,” said Vitor Gaspar, the IMF’s Director of Fiscal Affairs.

Gaspar and the IMF’s W. Raphael Lam, Paolo Mauro, and Mehdi Raissi write in a new blog that if the global pandemic is controlled via vaccination, the resulting stronger economic growth would yield more than $1 trillion in additional tax revenues in advanced economies by 2025—and save more in fiscal support measures. The COVID-19 vaccination will thus more than pay for itself, providing excellent value for the public money invested in it. Read the full report and 📺 watch the press briefing here.

Tied to the release of the Fiscal Monitor, read a blog based on a new analytical chapter, that finds that inequality was a pre-existing condition that worsened COVID-19’s impact.


IMF CAPACITY DEVELOPMENT FOR A SUSTAINABLE RECOVERY

IMF Capacity Development events at the 2021 Spring Meetings covered the IMF’s engagement on social protection (with a particular focus on enhanced social safety nets in Ecuador and Pakistan), digital platforms promoting fiscal transparency and accountability in relation to COVID-19 (with a particular focus on francophone Africa and Honduras), inclusive growth (interactive session launching our new course – enroll for free by May 25), and digital payments.

If you’re seeking to learn more on how the IMF and its partners have developed capacity to help respond to the pandemic crisis and promote a sustainable recovery, you can explore our latest infographic, our updated brochure on regional capacity development centers around the world, and the latest state of play with IMF Capacity Development partnerships.

Soon you can watch Managing Director Kristalina Georgieva and leading representatives of IMF partners and beneficiaries reflect on the importance of partnerships to help fast-track recovery. Deputy Managing Director of the IMF Antoinette M. Sayeh will also chair a high-level meeting with partners on April 13 to help us meet the surge in capacity development needs, including through the COVID-19 Initiative.


THE WEEK AHEAD

Sunday, April 11

7:00 AM – 7:45 AM:
IMF Press Briefing: Middle East and Central Asia Department

Speaker: Jihad Azour, Director, Middle East and Central Asia Department, IMF // Moderator: Wafa Amr, Senior Communications Officer, IMF

Monday, April 12

7:00 AM – 8:30 AM:
Arising from the Pandemic: Building Forward Better in the Middle East and North Africa

Speakers: Jihad Azour, Director, Middle East and Central Asia Department, IMF; Fadi Ghandour, Executive Chairman, Wamda Group, Jordan; Sarah Al Suhaimi, Chair of the Saudi Stock Exchange (Tadawul); Ibrahim Elbadawi, Managing Director, Economic Research Forum, Egypt // Moderator: John Defterios, Emerging Markets Editor and Anchor, CNN Business

11:00 AM – 12:00 PM:
Beyond Keeping the Receipts: Governance Challenges and Lessons from COVID Emergency Financing

Speakers: Geoffrey Okamoto, First Deputy Managing Director, IMF; Sawsan Gharaibeh, Chairperson, Rasheed (Transparency International – Jordan); Ghizaal Haress, Ombudsperson, Islamic Republic of Afghanistan; Dondo Mogajane, Director-General, National Treasury, South Africa // Moderator: Rhoda Weeks-Brown, General Counsel & Director, Legal Department, IMF

Tuesday, April 13

9:00 AM – 9:45 AM:
IMF Press Briefing: Asia and Pacific Department

Speaker: Jonathan D. Ostry, Deputy Director, Asia and Pacific Department, IMF // Moderator: Keiko Utsunomiya, Senior Communications Officer, IMF

11:00 AM – 12:00 PM:
In Conversation: Discussion Between Kristalina Georgieva and Commissioner Paolo Gentiloni

Speakers: Kristalina Georgieva, Managing Director, IMF; Paolo Gentiloni, European Commissioner for Economy

Wednesday, April 14

7:30 AM – 8:30 AM:
Post-COVID Economic Challenges and Opportunities in the Caucasus and Central Asia

Speakers: Jihad Azour, Director, Middle East and Central Asia Department, IMF; Natela Turnava, Minister of Economy and Sustainable Development, Georgia; Timur Ishmetov, Minister of Finance, Uzbekistan; Peter Burian, Special Representative for Central Asia, European Union // Moderator: Nastassia Astrasheuskaya, Central Asia Reporter, Financial Times

9:00 AM – 9:45 AM:
IMF Press Briefing: European Department

Speaker: Alfred Kammer, Director, European Department, IMF // Moderator: Meera Louis, Communications Officer, IMF

Thursday, April 15

7:00 AM – 7:45 AM:
IMF Press Briefing: African Department

Speaker: Abebe Aemro Selassie, Director, African Department, IMF // Moderator: Andrew Kanyegirire, Senior Communications Officer, IMF

1:00 PM – 1:45 PM:
IMF Press Briefing: Western Hemisphere Department

Speaker: Alejandro Werner, Director, Western Hemisphere Department, IMF // Moderator: Maria Candia Romano, Communications Officer, IMF

📣 Don’t worry, in next week’s edition of the Weekend Read, we’ll cover everything above!


HIGHLIGHTS OF THE PAST WEEK

UN Special Envoy on Climate Action and Finance Mark Carney and Sri Mulyani Indrawati, Indonesia’s Minister of Finance, examined how, with the right measures, this transition may be one of the greatest opportunities to reshape the global economy, to achieve the Sustainable Development Goals, and to reduce poverty.  📺 Watch the full event here.

David Malpass, President of the World Bank Group, Kristalina Georgieva, Managing Director of the International Monetary Fund, and Janet Yellen, U.S. Secretary of the Treasury discussed what is needed to support a faster and deeper economic recovery that lays a foundation for a more sustainable and inclusive global economic system. 📺 Watch the video here.

Managing Director Kristalina Georgieva discussed how tackling debt vulnerabilities is critical to prevent divergent recoveries. A panel that includes Mohamed A. El-Erian, President of Queens’ College, Cambridge, and Vera Songwe, Under-Secretary-General of the United Nations explored ways to contain debt risks through better debt architecture and transparency and how global cooperation can help. 📺 Watch the discussion here

In a new blog by the IMF’s Phillipp Engler, Roberto Piazza and Galen Sher, based on the analytical chapter 4 of our latest World Economic Outlook, they write that the reason behind rising interest rates in advanced economies matters when it comes to the impact on emerging markets. 

In a new blog by the IMF’s Guillaume Chabert, Robert Gregory and Gaelle Pierre, based on a new policy paper, they estimate that low-income countries will need around $200 billion until 2025 to step up their response to the pandemic, and a further $250 billion to catch up with advanced economies. An additional $100 billion will be needed if risks identified in the baseline scenario materialize. 

Aurélia Nguyen, Managing Director of the COVAX Facility and Sabina Bhatia, Deputy Secretary of the IMF, discussed the challenges of vaccine procurement and distribution, and highlighted the need for international cooperation to secure global and equitable access to vaccines. 📺 Watch the full event by clicking here.

In governor talks on Tuesday, Fahad Almubarak, Saudi Central Bank Governor, on policy responses to COVID-19, he said, “We made vaccines available to all those who live in Saudi Arabia, whether they are Saudis or non-Saudis. When it comes to health, there is no difference.” 📺 Watch more hereBoris Vujčić, Governor of Croatian National Bank, on asset purchase programs in emerging markets, he said, “The longer the Asset Purchase Programs last, the higher the risk that both the governments and markets become highly dependent on these policies, and the more difficult the exits are.” 📺 Watch more here. We also have more governor talks with officials from Brazil, Thailand, Spain and Burkina Faso.

In an analytical corner event focused on digitalization, Diego Cerdeiro of the IMF’s Asia and Pacific Department discussed channels through which technological decoupling can affect growth, and presents some estimates based on a range of possible decoupling scenarios. Alpa Shah, of the IMF’s Fiscal Affairs Department, talked about the economic rationale and implications of digital services taxes. Catalina Margulis, of the IMF’s Legal Department, focused on the legal foundations for central bank digital currencies. 📺 Watch the presentations here.

Finally, the IMF Executive Board on Monday extended debt service relief for 28 eligible low-income countries through October 15. The debt relief will help free up scarce financial resources for vital emergency health, social, and economic support to help with the impact of the COVID-19 pandemic.


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