The International Chamber of Commerce (ICC) has called for a major step change in approach from the world’s largest economies to boost access to vaccines in the developing world and stave off the looming threat of an emerging market debt crisis.
On the eve of this weekend’s leaders’ summit in Rome, ICC Secretary General John W.H. Denton AO said:
“It’s vital G20 leaders wake up to the fact that no country is immune to the economic risks posed by the continued spread of Covid-19 in the developing world. Vaccine inequality is, ultimately, the root cause of the supply chain disruptions that are already placing a major drag on global growth.
“We need a cast iron commitment from the G20 to redistribute available vaccines and switch delivery contracts out of opaque bilateral arrangements to COVAX – the multilateral facility mandated to enable the equitable supply of proven Covid-19 vaccines. We estimate that the United States, the European Union, the United Kingdom and Canada alone are already stockpiling more than 200 million doses. Sharing unused stockpiles without delay is the best thing any government can do to avoid an inflationary spike becoming a long-term problem at home.
“The economic logic for coordinated G20 action to get 70 percent of the world’s adult population vaccinated by early next year isn’t just theoretical – the effects of vaccine inequality are being felt by businesses, workers and families in the real economy every day. Allowing the virus to remain unchecked across much of the globe will only lead to more production shortfalls, logistical logjams and yet higher prices at the till. The time for the G20 to act decisively is now.”
Mr Denton also urged G20 leaders to commit to urgent action to address the debt burden faced by many developing nations:
“It’s deeply worrying that the debt service suspension agreed by the G20 early last year will expire in just two months – right as many emerging economies are showing increased signs of debt distress. It’s high time for G20 leaders to acknowledge that their “common framework” to allow countries in need to restructure their debts isn’t working.
“This weekend’s summit must fire the starting gun for a process to accelerate use of the common framework by countries in need – or, failing that, a concerted effort to find new mechanisms to mitigate the risk of vulnerable nations being asked to choose between paying creditors and protecting lives and livelihoods in the face of Covid-19. Innovative instruments warrant far greater consideration by the G20 as a path out of what is, quite clearly, a looming crisis.
“Whatever the path taken, the commitments made in Rome must be broad and decisive: the real economy should not be left facing the dual risks of a prolonged pandemic and a contagious debt crisis entering 2022.”