Widespread vaccination is probably the highest return global public investment project ever, an International Monetary Fund (IMF) official has said, urging policymakers to give a fair shot at vaccination to all people across the globe.
“Vaccination is a light at the end of the tunnel. It really points in the direction that eventually we will have COVID-19 under control,” Vitor Gaspar, director of the IMF’s Fiscal Affairs Department, told Xinhua in a video interview earlier this week.
Noting that vaccination policy is economic policy, Gaspar cited the IMF’s latest World Economic Outlook as saying that a faster rollout of vaccination at the global level could generate 9 trillion U.S. dollars in additional economic activity by 2025.
“Clearly if you take into account that according to some estimates, vaccination of one person costs about 30 dollars, you actually realize that the amounts involved make an effort at global vaccination, probably the highest return global public investment project ever,” he said.
Looking back, Gaspar said policymakers across the globe acted quickly and decisively with fiscal policy to cushion the impact of COVID-19 in March and April last year, which showed that fiscal policy is powerful.
Moreover, he said, “we see that countries with easier access to financing, stronger fiscal buffers were able to deploy more fiscal support and they’re projected to be able to keep it for longer.”
“We believe that countries could very well benefit from using credible medium term fiscal frameworks to manage public finance risks and the challenges associated with the conduct of fiscal policy over time,” Gaspar said.
According to the newly released Fiscal Monitor, government deficits and debt have risen to unprecedented levels, given major fiscal support, along with a sharp fall in revenues caused by contractions in output. Global public debt climbed to 97.3 percent of GDP in 2020, a surge of 13 percentage points from the level projected before the pandemic.
Gaspar told Xinhua that many low-income developing countries, in particular, are facing situations of debt vulnerabilities.
The IMF official said these countries had to extend resources and financial support to health systems, vulnerable households, vulnerable firms, but in many cases, they had to do it “at the expense of development expenditure.” “These countries need support from the global community,” he said.
“They need assistance through grants, concessional lending, and in some cases, debt restructuring may be necessary in line with common framework, agreed by the G20.”
The Fiscal Monitor also urged countries to provide flexible and targeted support until the pandemic is under control, as the need and scope for such support vary across sectors and economies.
“The pandemic has had a disproportionately negative effect on poor people, youth, women, minorities, and workers in low-paying jobs and the informal sector,” Gaspar noted.
“Policymakers should ensure that social protection is available and spending is sustainable over the duration of the crisis by expanding the coverage of social safety nets in a cost-effective way,” he said.
Noting that the pandemic is worsening inequality, the Fiscal Monitor suggested policymakers tackle the issue with “redistribution,” such as more progressive taxation, and also “predistribution,” which highlights universal access to basic public services like healthcare, education and social security.
In the case of China, the IMF official said a more generous coverage of the social safety net in China would be very important, and a reform of the tax system would be called for, which would assist the transition to the country’s new model of growth.
“Going forward, there is room to have a rebalancing of growth from investment to consumption, from exports to domestic demand,” he added.