Global Covid-19 vaccine distribution will have substantial economic benefits, according to the IMF.
Michael Ciaglo, Getty Images via AFP
- Over the past 12 months, countries have implemented as much as $16 trillion in fiscal actions in response to the Covid-19 pandemic.
- Vaccinations, in particular, could be the highest return global investment ever, says director of the fiscal affairs department at the IMF, Vitor Gaspar.
- According to the IMF, the global distribution of vaccines will have economic benefits such as employment growth and tax revenues.
Global access to Covid-19 vaccines will yield economic benefits such as stronger employment and even higher tax returns, according to the International Monetary Fund (IMF).
The IMF on Wednesday released its Fiscal Monitor report. Speaking at a virtual event on the report, the IMF’s director of the fiscal affairs department Vitor Gaspar explained that countries made substantial fiscal adjustments in response to the global health emergency brought on by the Covid-19 pandemic in 2020.
In the past 12 months, countries announced $16 trillion worth in fiscal actions. Some countries even increased their debt levels and deficits to respond to the health crisis. Fiscal policy adjustments helped to lessen the impact of falling economic activity and employment triggered by lockdowns.
Average public debt worldwide increased to 97% of GDP in 2020, it will likely stabilise around 99% of GDP in 2021, Gaspar said. Average overall deficits are at 11.7% of GDP for advanced economies and 9.8% for emerging market economies.
Despite the higher debt levels, average interest payments are lower in advanced economies and many emerging markets, the report read. The IMF however, noted that in low-income countries, financing large deficits remains a challenge, and they require grants, concessional financing and even debt restructuring.
Gaspar said that everyone should get a “fair shot” at receiving the Covid-19 vaccine.
Advanced economies in particular stand to gain more than $1 trillion in tax revenue over the medium term due to vaccine distribution. “A fair shot, a vaccination for everybody in the world may well be the highest return global investment ever,” said Gaspar.
The evolution of the Covid-19 pandemic remains uncertain, which means policies need to stay agile, he explained.
“Countries are in different stages of Covid-19 and economic recovery. Structural characteristics are important to consider,” he said. The IMF warned that the longer the pandemic lasts, the larger the challenge will be for public finances. Policymakers will have to balance the risk of growing debt with that of withdrawing fiscal support too soon, as it will slow down the recovery, the IMF highlighted.
Secondly, it is crucial to give everyone a “fair shot” at life success, said Gaspar.
“The Fiscal Monitor shows pre-existing inequalities made Covid-19 worse and at the same time aggravated inequalities.” There is a need for stronger redistributive policies and universal access to basic services like health, education and social security, he added.
IMF Managing Director Kristalina Georgieva on Tuesday echoed these sentiments during a panel discussion on economic recovery. Georgieva said that everyone should get a “fair shot in the arm” to bring the pandemic to a durable end and a “fair shot” or chance for a better life.
“If we do not do it, then we risk inequalities to deepen and to hold societies and to hold growth back.”