Thread by @Kentikelenis

Softening the blow of Covid-19 in low- and middle-income countries: will the IMF and World Bank make things worse?

In @LancetGH, we review policies & alternatives.

Thread on article w/ @DanielaGabor @IsabelOrtizUN @thomstubbs @martinmckee @davidstuckler
thelancet.com/journals/langl…

Developing countries will face enormous economic fallout from Covid-19. Already there are massive capital outflows.

This constrains governments from spending on health systems at a time when capacity urgently needs to expand and depresses economic activity.

2/17

The G20 expects IMF and World Bank to playing central role in supporting these countries, and both announced a set of tools to deal with the pandemic's impact.

But is this the best way to achieve lasting global health security?

3/17
france24.com/en/20200326-we…

IMF received assistance requests from ~85 countries and made available 2 emergency funding streams, not requiring a full-fledged IMF program.

(a) Rapid-disbursement funding: $50bn in total
(b) Catastrophe containment & relief support: ~$400mil available; maybe more to come

4/17

Thus far, only 4 countries have received financing from either.

See overview by @ChristinaLaska1

5/17

https://twitter.com/ChristinaLaska1/status/1248045632163627010

The IMF's principal response has been more of the same: urging crisis-stricken countries to apply for conventional loans that also carry greater flexibility in funding. Up to $1 trillion is reportedly available.

Great, but what could go wrong?

6/17
imf.org/en/News/Articl…

IMF loans are subject to conditionalities: reforms that must be introduced before money is disbursed

These can adversely impact health bc they include ill-designed measures like budget cuts, reducing number/wages of health workers, privatizations...
7/17
thelancet.com/journals/langl…

The World Bank has announced a $14 billion package of fast-track assistance and hopes to deploy up to $160 billion over the next 15 months.

8/17
worldbank.org/en/news/press-…

Bulk of fast-track support ($8bn) will channel through the Int’l Finance Corp, the WB's private sector financing arm

This is despite IFC's lack of expertise in building public health systems, and poor results of public–private partnerships in health

9/17
doi.org/10.1080/014365…

The remaining $6bn will support healthcare directly.

But will this strengthen public health systems that are struggling now or instead finance private health services that might take much-needed staff from the public sector?

The latter seems more likely, for 2 reasons.
10/17

First, the $2bn that IFC will disburse via its Real Sector Crisis Response Facility includes loans to private healthcare companies

Second, WB president Malpass clarified that Bank support will be conditional on structural adjustment policies, as per his quote below:

11/17

In short, both the IMF and parts of the World Bank are pursuing policies that can have adverse consequences on health outcomes because they prioritize fiscal objectives and market-driven solutions.

Is there an alternative? We argue, yes.

12/17
doi.org/10.1016/j.socs…

First, invest in universal public health.

Public health systems need funding to recruit health workers, run facilities & purchase equipment/drugs. These investments would help ensure universal coverage.

See discussion by @IsabelOrtizUN @thomstubbs

13/17
ipsnews.net/2020/03/fighti…

Second, pandemic funds should promote real economy activities and social protection, avoiding conditionalities.

Injecting international liquidity will help affected countries.

See proposals by @KevinPGallagher @JoseA_Ocampo @UliVolz

14/17
ftalphaville.ft.com/2020/03/20/158…

Third, expand financing sources & regulate capital flows.

Govts need extra fiscal space. Capital controls can stop destabilising mass outflows & IMF can assist countries instituting them
See proposals by @DanielaGabor @Jayati1609 @adam_tooze et al.
15/17
ft.com/content/350538…

Fourth, there must be an immediate debt moratorium to public and private creditors, channeling funds to deal with the pandemic.

See call by @ECA_OFFICIAL

16/17
uneca.org/stories/africa…

For decades, the IMF & World Bank have pursued policies that undermine public health systems, allowing billions of people to remain without adequate health care.

The COVID-19 pandemic is an opportunity to do things differently.

/end

cc @brettonwoodspr @MiriamBrett @IEfinanceHRs @zeithistoriker @jamiemartin2 @RosalindMcKenna @MattHGoldmann @BJMbraun @cornelban73 @LenSeabrooke