The COVID-19 pandemic will continue to swell global public debt in 2021, but spending more money to accelerate vaccinations is the fastest way to start to normalize government finances, the International Monetary Fund said on Wednesday (7 April), writes David Lawder.
The IMF said in its 2021 Fiscal Monitor report that if faster global vaccinations bring the virus under control sooner, more than $1 trillion in additional global tax revenue could be collected through 2025 in advanced economies.
If that same upside scenario in the Fund’s economic forecasts materializes, global GDP output could increase by $9 trillion during the same period as businesses reopen and hire more quickly, the IMF said.
“Vaccination will, thus, more than pay for itself, providing excellent value for public money invested in ramping up global vaccine production and distribution,” the IMF said in the report.
The IMF and the World Bank during their virtual Spring Meetings this week are urging member countries to keep up fiscal support for their economies and vulnerable citizens and businesses until the pandemic is firmly under control.
The Fund estimated governments have deployed some $16 trillion in pandemic-related fiscal support since the pandemic started through March 17 this year. That includes $10 trillion from additional spending and foregone revenue, and $6 trillion worth of government loans, guarantees and capital injections for businesses.
In 2021, the Fund projects fiscal deficits will shrink slightly in most countries as pandemic-related support expires or winds down, unemployment claims drop and revenues start to recover as businesses reopen.
Average overall budget deficits reached 11.7% of GDP for advanced economies in 2020 -- quadruple their 2.9% share in 2019 -- but they should narrow to 10.4% in 2021, the IMF said.
Deficits in emerging economies will also shrink slightly in 2021 to 7.7% of GDP for emerging market economies and to 4.9% for low-income economies.
Average worldwide public debt is projected to hit a record 99% of GDP in 2021 and to stabilize at that level after rising slightly from 97% in 2020. For advanced economies, debt will peak at 122.5% in 2021, up from 120.1% in 2020.
The IMF called for more targeted support for vulnerable households, including minorities, women and workers in low-paying jobs in the informal sectors of many economies. More focused support for small businesses was also needed, it said.
But it said some advanced countries with high debt levels may need to start rebuilding fiscal buffers to prepare for future shocks. It said those countries should develop multi-year frameworks for increasing revenues and rationalizing spending, giving priority to investments to fight climate change and reduce economic inequality.
In a Fiscal Monitor chapter released last week, the IMF said advanced economies could use more progressive income taxes, inheritance and property taxes, and taxes on “excess” corporate profits to help reduce inequalities exposed by the COVID-19 pandemic.
EU has not yet ordered more AstraZeneca vaccines, says internal market commissioner
The European Union has not yet made any new orders for AstraZeneca (AZN.L) vaccines beyond June when their contract ends, European Internal Market Commissioner Thierry Breton (pictured) said on Sunday (9 May).
The Commission last month launched legal action against AstraZeneca for not respecting its contract for the supply of COVID-19 vaccines and for not having a “reliable” plan to ensure timely deliveries.
"We did not renew the order after June. We’ll see what happens," said Breton, adding that it was "a very good vaccine".
Concerns has risen on potential side-effects of the Anglo-Swedish COVID-19 vaccine.
Europe's medicines regulator said on Friday it is reviewing reports of a rare nerve-degenerating disorder in people who received the shots, a move that comes after it found the vaccine may have caused very rare blood clotting cases. Read more.
Breton said an increase in prices for second generation vaccines could be justified by the extra research required and potential changes to industrial equipment.
The European Union signed a new contract with Pfizer-Biontech to receive 1.8 billion doses of COVID-19 vaccines for 2021-2023, to cover booster shots, donations and reselling of doses, the European Commission said on Friday (7 May). Read more.
“There may be a little extra cost but I will let the competent authorities unveil it in due course,” he told France Inter radio.
Hoping to lure back tourists, Greece reopens beaches after lockdown
With widely spaced sun loungers and regular disinfections, Greece reopened its organised beaches on Saturday as the popular Mediterranean holiday destination eases COVID-19 curbs in preparation for the return of foreign visitors this week.
Tourism accounts for about a fifth of Greece's economy and jobs, and - after the worst year on record for the industry last year - the country can ill afford another lost summer. Read more
"We're pinning our hopes on tourism," said Nikos Venieris, who manages a sandy beach in the seafront suburb of Alimos, just outside the capital, Athens, where social distancing measures will remain in place.
"We're one of the places along the Athens riviera ... that receives many tourists so the number of visitors from abroad will play a big role in our finances," he added.
Under current measures, beach managers like Venieris will have to place umbrellas at least four metres (13 feet), carry out regular disinfections and test beach bar employees and other staff for COVID-19.
Greece fared well in keeping the first wave of the pandemic under control last year but a resurgence in cases pushed health services to the limit and prompted authorities to impose a second lockdown in November.
As infections have fallen and vaccinations gathered pace, authorities have steadily eased restrictions, opening bars and restaurants earlier this week.
On Friday, they announced that museums would reopen next week before the lifting of travel restrictions on vaccinated foreign visitors on May 15.
Greek Prime Minister Kyriakos Mitsotakis has said a combination of widespread testing, immunisation, and the fact that many activities would take place outdoors gave authorities confidence that tourists would be able to visit safely.
For Greek beach lovers, Saturday's reopening of the country's largest beaches was a chance to let off steam after months of lockdown.
"We've been longing for this for six months now, because we're winter swimmers and we've really missed it," said Spiros Linardos, a pensioner, reclining on a sun lounger at Alimos.
EU calls on US and others to export their vaccines
The European Commission called on Friday (7 May) on the United States and other major COVID-19 vaccine producers to export what they make as the European Union does, rather than talk about waiving intellectual property rights to the shots.
Commission head Ursula von der Leyen told a news conference on the sidelines of a summit of EU leaders that discussions on the waiver would not produce a single dose of COVID-19 vaccine in the short- to medium-term.
"We should be open to lead this discussion. But when we lead this discussion, there needs to be a 360 degree view on it because we need vaccines now for the whole world," she said.
"The European Union is the only continental or democratic region of this world that is exporting at large scale," von der Leyen said.
She said about 50% of European-produced coronavirus vaccine is exported to almost 90 countries, including those in the World Health Organization-backed COVAX program.
"And we invite all those who engage in the debate of a waiver for IP rights also to join us to commit to be willing to export a large share of what is being produced in that region," she said.
Only higher production, removing exports barriers and the sharing of already-ordered vaccines could immediately help fight the pandemic quickly, she said.
"So what is necessary in the short term and the medium term: First of all vaccine sharing. Secondly export of vaccines that are being produced. And the third is investment in the increasing of the capacity to manufacture vaccines."
Von der Leyen said the European Union had started its vaccine sharing mechanism, citing delivery of 615,000 doses to the Western Balkans as an example.
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