Press Release: Call for IMF Aid to Support Vaccine Purchases by Developing Countries
For Immediate Release: May 14, 2021
Contact: media@epsusa.org
Economists for Peace and Security (EPS) today renewed its call for urgent action by the international community to address the critical shortage of COVID-19 vaccines in developing countries. Some 3.6 billion people in low- and middle-income countries will not have full access to vaccines until 2022 or later, leading to a tragic loss of life, a delayed global economic recovery, and increased risk of new variants extending the worldwide pandemic.
EPS supports action to provide developing countries with the resources they need to get immediate access to vaccines. We support proposals that have been offered so far, including by the Center for Global Development (CGD), the Progressive Caucus in the United States Congress, and other similar initiatives.
The CGD has called for the International Monetary Fund (IMF) to create a Multilateral Vaccine Purchase (MVP) window. The proposal, outlined in new paper, would enable developing countries to purchase vaccines up-front by using up to 50 percent of their quotas under the IMF’s Rapid Financing Instrument. At a cost of $10 per person, the proposal could provide sufficient funding — up to $31 billion — to vaccinate the entire populations of all low- and middle-income countries (excluding China and India). The proposal should be expanded to include assistance for India.
The proposed MVP would be used by countries to support the COVAX initiative set up to coordinate international vaccine purchasing efforts. So far, more than 180 countries have signed up to COVAX, which aims to unite countries into one bloc so they have more power to negotiate with drug companies. However, a lack of financial support means it has not been able to offer the necessary up-front payments required to secure large orders. The MVP window could fill this gap. It would provide COVAX with the financial leverage needed to negotiate increased vaccine production, rather than simply compete with rich countries over existing supply. The MVP would draw on existing IMF resources and would not require additional funding from the US or other IMF member governments.
EPS also supports a proposal by the Congressional Progressive Caucus to enact legislation (passed in the House of Representatives twice last year and re-introduced this year) which provided that the US government support an IMF issuance of 2 trillion Special Drawing Rights (SDRs), distributed to all member countries. SDRs are a financial asset created by the IMF that countries can cash in for hard currency. This resource would provide badly needed international reserves for developing countries, help them recover and avoid crises, and allow them to spend some of these reserves, converted to hard currency, for urgent health needs.
“Millions of people in developing countries remain at risk from the pandemic and that in turn jeopardizes both the economic recovery and public health of all of us,” said Professor Linda Bilmes of Harvard, co-chair of EPS. “The IMF, as the global institution charged with providing balance of payments financing, is ideally placed to provide the funding needed to address this. The Biden administration should throw its support behind this use of the IMF, without delay, to save lives around the world.”
EPS also supports proposals currently under discussion at the IMF involving the re-allocation of SDRs from high-income countries (who will receive most of the $650 billion worth of SDRs to be issued by the IMF in August) to low- and middle-income countries that need the SDRs the most. There are a number of such proposals under consideration, including some that would help countries access vaccines or fund climate change mitigation measures. We strongly endorse re-allocation proposals that would not create any new debt for countries and do not come with conditions attached to them.
Additionally, EPS applauds the decision of the Biden administration last week to support and negotiate a waiver of intellectual property claims at the WTO for COVID-19 vaccines. This waiver would help developing countries produce vaccines created by pharmaceutical companies in an effort to further limit the spread of the coronavirus. We strongly support US efforts to leverage its patent ownership over vaccine innovations to license their widespread production, as well as funding for the Build Back Better agenda to manufacture vaccines domestically and provide them to the world and cooperation with the World Health Organization’s program to transfer vaccine technology to global producers.
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About Economists for Peace and Security
Economists for Peace and Security (EPS) evaluates the economic impacts of security policies, and the security impacts of economic policies. We promote non-military solutions to world challenges, and more broadly work towards freedom from fear and want for all. Our Board of Trustees includes nine Nobel Laureates.