UN Secretary-General Antonio Guterres on Monday highlighted three areas for immediate action to launch a recovery from COVID-19 that benefits all, including the most fragile states.
First, he called for measures to mitigate the debt crisis in many countries.
While investments must be scaled up and directed into both short-term crisis relief and long-term recovery, many countries are being crushed by debt service costs. Global public debt has soared to 100 percent of GDP, he told an event organized by the International Monetary Fund (IMF) on COVID-19 and fragile states.
“I reiterate my call for an expansion of liquidity for the countries in greatest need, in the first instance, through a substantial re-allocation of unused Special Drawing Rights (of the IMF) to vulnerable countries that need them,” he said.
The Group of 20’s Debt Service Suspension Initiative must be extended into next year, and expanded to include middle-income countries. The Common Framework for Debt Treatment must be fully operationalized, he added.
But simply suspending debt payments will not be enough in many countries. They will need effective debt relief, involving both public and private creditors. There is a need for a comprehensive strategy around reforming the international debt architecture, including debt restructuring or reduction. Private finance must be brought in to help fill the gap, he said.
“It is deeply unfair that rich countries can borrow cheaply and spend their way to recovery, while low-income countries must struggle to keep their economies afloat. No country should be forced to choose between servicing its debt and serving its people”, said Guterres.
Second, there is a need to support governments, particularly in countries affected by crisis and fragility, to implement social and economic policies that build trust with their citizens and bolster resilience against future shocks, including the climate crisis, he said.
This requires significant investments to achieve universal social protection by 2030, and to prepare people for the changing world of work through life-long learning, re-skilling and up-skilling programs.
Guterres called for support for the UN Global Accelerator on Jobs and Social Protection, which aims to create 400 million new jobs in the green and care economy by 2030, and to extend social protection to the 4 billion people still left unprotected.
Third, to achieve the breakthrough the world urgently needs, the international community must lead from the front, said Guterres.
“We must demonstrate mutual solidarity and trust by working closely together across the humanitarian-development-peace nexus to achieve common goals,” he said. “We can use our collaborative advantages to promote greater understanding of multidimensional risk, and more strategic collaboration at the country level, and to respond to compound risks and multidimensional challenges.”
Forecasts indicate that the world is in the middle of a substantial economic recovery, with GDP growth ranging between 5 and nearly 6 percent. But the figures mask enormous divergence. Many developing countries and regions are lagging far behind, said Guterres.
Advanced economies are investing nearly 28 percent of their GDPs in economic recovery. That figure drops to only 1.8 percent for the least developed countries, less than 2 percent of a very small gross domestic product, he said.
Countries affected by conflict and crisis countries have the least fiscal space to invest in the policies they need for a sustainable, inclusive recovery, policies like renewable energy, social protection and health care for all. Many of these states are also on the front lines of climate change and the brutal assault on nature, he said.
Fragility and conflict can only be addressed by macroeconomic policies that promote inclusive growth and resilience, centered on a transition to stability and the 2030 Agenda for Sustainable Development, he said. “We need financing instruments that are tailored to the unique policy space of fragile states. The right macroeconomic policies can ensure that countries generate enough fiscal space to maintain and eventually expand social spending, and to invest in prevention and peacebuilding.”