Via IMF (Den Internationale Valutafond)

Some say there is a trade-off: save lives or save jobs – this is a false dilemma

April 3, 2020

An Op-ed first published on The Telegraph by Kristalina Georgieva and Dr Tedros Adhanom Ghebreyesus

As the world responds to COVID-19, country after country is faced with the
need to contain the spread of the virus at the cost of bringing its society
and economy to a standstill.

At face value there is a trade-off to make: either save lives or save
livelihoods. This is a false dilemma – getting the virus under control is,
if anything, a prerequisite to saving livelihoods.

This is what brings the World Health Organization (WHO) and the
International Monetary Fund (IMF) so closely together – the WHO is there to
protect the health of people and well-placed to advise on health
priorities; the IMF exists to protect the health of the world economy – it
advises on economic priorities, and also helps provide financing.

Our joint appeal to policymakers, especially in emerging market and
developing economies, is to recognise that protecting public health and
putting people back to work go hand-in-hand.

The WHO is on the front line of this crisis by the virtue of its mandate,
but so is the IMF. In the short time since COVID-19 started spreading
across the world,

the demand for IMF financing has skyrocketed

Never in the 75 years history of the institution have so many countries –
85 so far – found themselves in need of IMF emergency financing. And this
financing is being made available in record short time, with the first
projects already being approved and money disbursed to provide much needed
assistance to shield countries against dramatic increase in financial needs
at a time of sudden drop in economic activities and in revenues.

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As financing to support severely constrained public budgets reaches the
countries in need, our joint plea is to place health expenditures at the
top of the priority list.

Paying salaries to doctors and nurses, supporting hospitals and emergency

establishing make-shift field clinics
, buying protective gear and essential medical equipment, carrying out
public awareness campaigns about simple measures like hand washing – these
are critical investments to protect people against the pandemic.

In far too many places health systems are

unprepared for an onslaught of COVID-19 patients

and it is paramount to give them a boost.

And this can and must go together with support for economy-wide priorities
required to reduce unemployment, minimise bankruptcies and, over time,
ensure recovery.

They come in addition to – not as a substitute for – health spending, and
aim to provide targeted support to most-affected households and firms,
including cash transfers, wage subsidies, and short-time work,
strengthening unemployment benefits and social safety nets, and limiting
the rise in borrowing costs.

We recognise how difficult it is to strike the right balance.

Economic activity is plummeting

as infections and measures to combat the pandemic affect workers, firms,
and supply chains, job losses and uncertainty drag down spending, financial
conditions sharply tighten, and the oil price collapse hits commodity
exporters – all with cross-border spillovers.

In countries with large informal economies families depend on daily wages
to survive. Highly congested urban slums

make social distancing impossible


We are convinced, however, that emergency financing can only help if
countries strike this balance. The WHO can help in vital areas for
coordination such as ensuring the production and delivery of medical
supplies to those in need, in an effective, efficient, and equitable manner
– by facilitating advance purchase agreements, for example.

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The WHO is also working with suppliers of personal protective equipment for
health workers to ensure that supply chains are functioning. And this is an
area where collaboration with other international organisations can be so
effective – for example, the World Bank’s capacity to aggregate demand to
purchase medical supplies in bulk.

The IMF for its part aims to help by doubling its emergency response
capacity from $50 billion up to $100 billion – making it possible for
countries to get twice as much money from the Fund as had been made
available during emergencies. It’s total lending capacity of $1 trillion is
now secured thanks to decisive actions of its membership.

The Fund is also increasing its capacity to ease debt service obligations
of its poorest members through the Catastrophe Containment Relief Trust for
which generous donors are providing grant resources. And together with the
World Bank it is advocating for a standstill of debt service from the
poorest countries to official bilateral creditors for as long as the world
economy is paralysed by the pandemic.

The course of the global health crisis and the fate of the global economy
are inseparably intertwined. Fighting the pandemic is a necessity for the
economy to rebound. That is why the WHO and IMF are cooperating closely
with one another, and with other international organisations, to help
address countries’ priority needs.

As we all work together, with little time and finite resources, it is
essential that we focus on the right priorities to save lives and
livelihoods. Our joint appeal is that in one of humanity’s darkest hours,
leaders must step up right now for people living in emerging markets.

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  • Kristalina Georgieva is Managing Director of the IMF, and Dr.
    Tedros Adhanom Ghebreyesus is Director-General of the WHO.
IMF Communications Department


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