New IMF reserves could fund vaccines in poor nations: Rockefeller

Moves to bolster the International Monetary Fund’s (IMF’s) emergency reserves could provide the $44bn needed to vaccinate 70 percent of the population in lower- and middle-income countries by the end of 2022, at no added cost to rich countries, according to a new Rockefeller Foundation report due to be released on Tuesday.

Finance officials from the Group of 20 top economies are expected to back a $650bn new allocation of the IMF’s Special Drawing Rights (SDR) this week to help countries cope with the pandemic and its economic effects.

SDRs are supplementary foreign exchange reserves used by the IMF to make emergency loans. Countries facing balance of payments shortfalls can exchange their SDRs with other IMF member countries for commonly traded currencies to meet short-term needs.

Vaccination rates and economic development are diverging widely across the globe, according to the IMF and other experts.

The Rockefeller report says rich countries could reallocate their new SDRs to quickly close the funding gap and get more people vaccinated around the world, preventing virus mutations that could stall a global economic recovery.

Africa’s needs

The World Bank estimates that Africa alone would need about $12bn for COVID-19 vaccines to attain sufficient levels of inoculations to interrupt virus transmission, according to a new paper by the lender and the IMF.

The paper, published on Monday, argued for an extension of the Group of 20’s debt service moratorium through to the end of the year, citing the continued high liquidity needs of developing countries and their deteriorating ability to sustain their debts.

But it said additional resources would be needed, noting that the amount of money Africa needed was about the same as the total amount of official debt service payments already deferred by 45 of the poorest countries participating in the G20’s Debt Service Suspension Initiative (DSSI).

The Rockefeller report noted that high- and upper-middle-income countries accounted for 86 percent of COVID-19 shots administered worldwide as of the end of March. It said advanced economies should aim to reallocate at least $100bn in SDRs to fund the vaccination drive and other measures needed to help poor and middle-income countries.

Donor countries could pledge new SDRs to the IMF’s Poverty Reduction and Growth Trust, which provides loans to 63 low-income countries, but could also provide them to 16 approved institutions, including the World Bank, which could make them more widely available via low- or no-interest loans.

Another option would be for those institutions to use re-allocated SDRs to back the issuance of bonds earmarked specifically for pandemic response and the vaccination drive, the report said.