Leaders at this year’s World Bank/IMF Spring Meetings (April 5-11) will determine how best to recover from one of the biggest crises the institutions have faced since their founding in 1944—COVID-19’s impact and its economic aftermath.
Given the need to fund treatment and vaccines, there is pressure to scale back funding for social provisions. But doing so would prove a catastrophic—and costly—mistake. Instead, leaders must boldly finance a more equal world.
The issue isn’t just that COVID’s impact is unequal; it’s that inequalities, especially gender inequality, hamper an effective recovery. They undermine the world’s readiness for future pandemics and shocks, and block achievement of the United Nations’ Sustainable Development Goals.
It is one thing to call for these inequalities to be addressed—and another to allocate funding to rectify them. We must invest in rights for them to be actualized.
COVID-19 has dramatically widened gaps between women and men in wealth, income, access to services, the burden of unpaid care, status and power. Pre-pandemic, 132 million girls were out of school.
Twenty million more secondary school-aged girls could be out of school post-pandemic. Many will not go back, putting them at greater risk for violence, HIV, teenage pregnancy, child marriage, poor health and poverty.
Because of COVID-19, two and a half million more girls are at risk of child marriage in the next five years and rates of violence against women and girls have precipitously increased. In the pandemic, women bear the brunt of job losses and comprise the majority of frontline health workers, many of whom are under-protected and under-paid.
Gender inequality is not only wrong—it is dangerous and weakens us all. It drives the spread of COVID-19 while threatening progress against AIDS and other pandemics. It depresses economic potential too: economies and nations only flourish when women can. Recovery strategies to pandemics cannot be gender blind or gender neutral. They must overturn the inequalities that hold women back.
Prior to COVID-19, many economies and societies were weakened by insufficient investments in health, education and social protection. The COVID-19 crisis revealed the pre-existing lack of resilience in many parts of our economies and societies. Finding the financing to fight inequality in the recovery from COVID-19 is essential.
How can world leaders finance an equal economic recovery from COVID-19?
Issuing Special Drawing Rights (SDRs) will help. A range of G20, emerging and developing nations support them. An agreement to secure $500 billion in SDRs, under discussion, could allow up to $25 billion to flow to the central banks of African nations.
Preferable would be securing up to $650 billion, the cap that requires U.S. Congressional approval. Should wealthy nations share even half of their proportional issuance with developing nations, SDRs could powerfully undergird vital investments.
Cancelling debt is critical. A large share of low and middle-income countries’ budgets pays off debt. This is especially the case in Sub-Saharan Africa where government debt increased to an estimated 70 percent of GDP in 2020.
Building back better after COVID-19 requires ensuring that no debt service payments be made, or forced, until investments necessary for achieving the UN SDG on health are secured.
Countries need to increase domestic revenues. The economic impacts of COVID-19 make this challenging short term. But policy changes can lay the path to domestic resource mobilization in days to come.
Three areas requiring policy change that could increase domestic resources are: 1) protecting against international tax evasion (through the G20-OECD-led processes) by setting a global, minimum corporate tax rate affecting all geographies/all companies, including digital ones, 2) establishing emergency tax measures such as taxes on wealth or excess profits in times of crisis and 3) designing progressive tax systems at the local and regional levels for both capital and income.
These new sources of funding can help eliminate user fees and boost investments in health and education.
User fees are a grave injustice—they tax the sick and increase mortality and morbidity while exacerbating poverty and inequities. No new mother should be chained to her hospital bed for not having the money to pay for her child’s birth.
Charging for healthcare not only hurts those affected; the spillover costs of ill health drain economic potential. Health crises won’t be stopped if some people can’t afford testing or treatment. Publicly provided healthcare is the most efficient and effective form of provision—it’s not an unaffordable burden but a smart investment.
Ensuring girls’ education and empowerment is vital to recovery. The gains from girls’ schooling are multiple, proven, and profound—from helping to prevent child marriages and teenage pregnancies and reducing violence and HIV infections, to increasing future earnings and strengthening economic growth.
Crises are a reckoning: they show us what is broken—and what needs to be fixed. Achieving a more equal world is not only a moral imperative—it will make the world more resilient to pandemics and makes us all healthier, safer and more prosperous. We can’t afford not to do it.