Citizen Action is Central to the Global Response to COVID-19

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Active Citizens, Development & Aid, Economy & Trade, Global, Headlines, Health, Humanitarian Emergencies, Labour, TerraViva United Nations

Opinion

NEW YORK and MANILA, Apr 22 2020 (IPS) – The coronavirus (COVID-19) pandemic has created an unprecedented human and economic crisis. Governments are taking strong actions, enforcing quarantines to reduce contagion, testing populations, building emergency intensive care units. Governments have also launched large fiscal stimulus plans to protect jobs and the economy, as well as temporary social protection programs such as income/food support, subsidies to utilities and care services.

Isabel Ortiz

But in many countries, even stronger actions are needed if we are to protect lives and jobs. States must respond adequately to this public emergency. Citizens must question if the measures implemented by their governments are sufficient and adequate.

The following are important issues for citizens and civil society organizations (CSOs) to watch out at the country level:

    1. It is time to invest in universal public health, not only emergency support. Given COVID-19, governments are advised to ramp up public health expenditures. Indeed, respirators, tests and masks are necessary, but countries need more than just emergency support. There is a risk that, as governments will become indebted, they continue with austerity cuts and privatizations that have been eroding public health systems in recent years, returning to a situation where millions are excluded from healthcare.
    2. Stimulating the economy and employment. This is much necessary to support job-generating enterprises during the COVID-19 lockdown. However, citizens need to be vigilant that fiscal stimulus do not go to the wrong hands, to large corporations avoiding taxes, to cronies, to the untaxed financial sector. If public funds are given to companies, it should be with strict conditions to stop tax evasion and share buybacks, undergo adequate regulation, cut obnoxious management bonusses, pay living wages and preserve employment.
    3. Providing social protection, income and food support to people. These measures are extremely urgent if people are to be quarantined and are unable to telework. In developing countries, most work precariously in the informal economy and isolation is not possible, households will suffer hunger with no income. Given the low living conditions in most developing countries, policymakers should consider the need for universal social protection floors.
    4. Governments need more executive powers to implement these measures. States and public policies have been weakened over the last decades by deregulations, privatizations and budget cuts. Better planning, better resources and better public policies for all citizens are needed, but it is important to ensure that far right and authoritarian leaders do not use the need for decisive executive action to grab more power for their own ends (eg. Brazil, Hungary, India, Philippines, US).

Additionally, it is important for citizens and CSOs to push for the following measures at the global level:

Walden Bello

    5. Support for global public health, at stake is the survival of the planet. The coronavirus pandemic has revealed the weak state of global public health systems – generally overburdened, underfunded and understaffed because of earlier austerity policies and privatizations. There is urgent need to improve the global governance of health, including the strengthening the WHO and UN agencies that support the extension of public health systems, as well as CSOs monitoring progress.
    6. Put pressure on the international financial institutions such as the IMF and the development banks, so their policies support universal public health systems, jobs and social protection floors at present as well as after the COVID-19 emergency, including resources and fiscal space to finance them.
    7. Given high sovereign debt levels, continue lobbying for debt forgiveness or radical debt relief to ensure that countries get the needed financing; or at least a debt moratoria, and later debt restructuring/relief.
    8. Watch out that new debt and fiscal deficits created to respond to COVID-19 do not result in a new round of austerity cuts with negative social impacts that will undermine public health systems, jobs and social protection.
    9. Ensure capital controls. Capital is flying North to safety, to the US, to Europe. Developing countries are going to be hard hit, not only because of the capital drain but also from the fall of commodity prices and others. Capital controls are easy to implement, with immediate results.
    10. A Global Marshall Plan, or a Global Green New Deal. Global problems require global solutions; after the WW2, the US implemented a Marshall Plan to rebuild Europe. This time, no country alone can or should finance a global plan, it can be built as part of a progressive multilateralism. There are many ways to finance it, solidarity taxes to wealth may well be a best way to reduce inequalities and even up world’s development. It can be complemented by other measures such as issuing more Special Drawing Rights (SDRs) at the international organizations.

The coronavirus pandemic has provided stark evidence of the weaknesses and extreme injustices of our world. We must not return to “normality”, a world where half of its population is living below the poverty line of $5.50 a day. We must move away from an inequitable model based on unregulated finance and corporate power, blind to harmful social and environmental impacts. We must back away from a system that disregards the work of health staff, cleaners, garbage collectors, farmers, and instead reward with huge salaries corporate managers, football players, and others who do not perform any essential activity. Now citizens have the opportunity to move forward.

As countries and enterprises recuperate from the crisis, they will have to rethink their economic model, including fewer links with global supply chains, and more links closer to home. It will be an important time for citizens and CSOs to press for “deglobalization”, making the domestic market again the center of gravity of the economy by preserving local production with decent jobs and green investments, and question global supply chains based on taking advantage of cheaper wages, lesser taxes and environmental regulations elsewhere.

Now is the time for citizens to ensure that world leaders forcefully respond to the COVID-19 crisis, in accordance with human rights. This time it cannot be like many earlier crisis experiences, where insufficient support was provided, or ended in the wrong hands, bailing out banks not the population. Citizens and CSOs have a very important role to play to ensure that governments respond to people.

Isabel Ortiz is Director of the Global Social Justice Program at the Initiative for Policy Dialogue, Columbia University, and former director of the International Labour Organization (ILO) and UNICEF.

Walden Bello is senior analyst at the Bangkok-based Focus on the Global South and the International Adjunct Professor of Sociology at the State University of New York at Binghamton.

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A Global Crisis Like No Other Needs a Global Response Like No Other

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Opinion

Kristalina Georgieva is the Managing Director of the International Monetary Fund (IMF)

WASHINGTON DC, Apr 22 2020 (IPS) – I have been saying for a while that this is a ‘crisis like no other.’ It is:

    • • More complex, with interlinked shocks to our health and our economies that have brought our way of life to an-almost complete stop;
    • • More uncertain, as we are learning only gradually how to treat the novel virus, make containment most effective, and restart our economies; and
    • Truly global. Pandemics don’t respect borders, neither do the economic shocks they cause.

Credit: IMF

The outlook is dire. We expect global economic activity to decline on a scale we have not seen since the Great Depression.

This year 170 countries will see income per capita go down – only months ago we were projecting 160 economies to register positive per capita income growth.

Actions taken

Exceptional times call for exceptional action. In many ways, there has been a ‘response like no other’ from the IMF’s membership.

Governments all over the world have taken unprecedented action to fight the pandemic—to save lives, to protect their societies and economies. Fiscal measures so far have amounted to about $8 trillion and central banks have undertaken massive (in some cases, unlimited) liquidity injections.

For our part, the IMF has $1 trillion lending capacity – 4 times more than at the outset of the Global Financial Crisis—at the service of its 189 member countries. Recognizing the characteristics of this crisis—global and fast-moving such that early action is far more valuable and impactful—we have sought to maximize our capacity to provide financial resources quickly, especially for low-income members.

In this regard, we have strengthened our arsenal and taken exceptional measures in just these two months.

These actions include:
• Doubling the IMF’s emergency, rapid-disbursing capacity to meet expected demand of about $100 billion. 103 countries have approached us for emergency financing, and our Executive Board will have considered about half of these requests by the end of the month.
• Reforming our Catastrophe Containment and Relief Trust, to help 29 of our poorest and most vulnerable members—of which 23 are in Africa—through rapid debt service relief, and we are working with donors to increase our debt relief resources by $1.4 billion. Thanks to the generosity of the UK, Japan, Germany, the Netherlands, Singapore, and China, we are able to provide immediate relief to our poorest members.
• Aiming to triple our concessional funding via our Poverty Reduction and Growth Trust for the most vulnerable countries. We are seeking $17 billion in new loan resources and, in this respect, I am heartened by pledges from Japan, France, UK, Canada, and Australia promising commitments totaling $11.7 billion, taking us to about 70 percent of the resources needed towards this goal.
• Supporting a suspension of official bilateral debt repayments for the poorest countries through end 2020—a ground-breaking accord among G20 countries. This is worth about $12 billion to nations most in need. And calling for private sector creditors to participate on comparable terms—which could add a further $8 billion of relief.
• Establishing a new short-term liquidity line that can help countries strengthen economic stability and confidence.

Kristalina Georgieva

This is the package of actions that the International Monetary and Financial Committee endorsed last week at our virtual Spring Meetings.

It represents a powerful policy response. Above all, it enables the IMF to get immediate, ‘here and now’ support to countries and people in desperate need. Today.

Preventing a protracted recession

But there is much more to be done and now is the time to look ahead. To quote a great Canadian, Wayne Gretzky: “Skate to where the puck is going, not where it has been.”

We need to think hard about where this crisis is headed and how we can be ready to help our member countries, being mindful of both risks and opportunities. Just as we responded strongly in the initial phase of the crisis to avoid lasting scars for the global economy, we will be relentless in our efforts to avoid a painful, protracted recession.

I am particularly concerned about emerging markets and developing countries.

They have experienced the sharpest portfolio flow reversal on record, of about $100 billion. Those dependent on commodities have been further shocked by plummeting export prices. Tourism-dependent countries are experiencing a collapse of revenues, as are those relying on remittances for income support.

For emerging economies, the IMF can engage through our regular lending instruments, including those of a precautionary nature. This may require considerable resources if further market pressures arise.

To prevent them from spreading, we stand ready to deploy our full lending capacity and to mobilize all layers of the global financial safety net, including whether the use of SDRs could be more helpful.

For our poorest members, we need much more concessional financing. With the peak of the outbreak still ahead, many economies will require significant fiscal outlays to tackle the health crisis and minimize bankruptcies and job losses, while facing mounting external financing needs.

But more lending may not always be the best solution for every country. The crisis is adding to high debt burdens and many could find themselves on an unsustainable path.

We therefore need to contemplate new approaches, working closely with other international institutions, as well as the private sector, to help countries steer through this crisis and emerge more resilient.

And the IMF, like our member countries, may need to venture even further outside our comfort zone to consider whether exceptional measures might be needed in this exceptional crisis.

Preparing for recovery

To help lay the foundations for a strong recovery, our policy advice will need to adapt to evolving realities. We need to have a better understanding of the specific challenges, risks and tradeoffs facing every country as they gradually restart their economies.

Key questions include how long to maintain the extraordinary stimulus and unconventional policy measures, and how to unwind them; dealing with high unemployment and ‘lower-for-longer’ interest rates; preserving financial stability; and, where needed, facilitating sectoral adjustment and private sector debt workouts.

We also must not forget about long-standing challenges that require a collective response, such as reigniting trade as an engine for growth; sharing the benefits of fintech and digital transformation which have demonstrated their usefulness during this crisis; and combating climate change—where stimulus to reinforce the recovery could also be guided to advance a green and climate resilient economy.

Finally, in the new post-COVID-19 world, we simply cannot take social cohesion for granted. So, we must support countries’ efforts in calibrating their social policies to reduce inequality, protect vulnerable people, and promote access to opportunities for all.

This is a moment that tests our humanity. It must be met with solidarity.

There is much uncertainty about the shape of our future. But we can also embrace this crisis as an opportunity—to craft a different and better future together.

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