An excellent but incomplete IMF decision

By José Antonio Ocampo, Professor at Columbia University and former UN Under-Secretary-General for Economic and Social Affairs and Finance Minister of Colombia

The decision of the IMF Board last Friday to approve the allocation of $650 billion in Special Drawing Rights (SDRs) is excellent news for the world economy. This proposal had been on the table since the early phase of the COVID-19 crisis. It was vetoed by the United States under the Trump administration, but endorsed by the Biden administration, who proposed the magnitude of the agreed allocation.

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Why local? Why now? Strengthening intermediary cities to achieve the SDGs

By Shipra Narang Suri, Ph.D. Chief, Urban Practices Branch, Global Solutions Division, UN-Habitat and Federico Bonaglia, Deputy Director, OECD Development Centre

Cities and local authorities around the world have played a key role in the response to the COVID-19 pandemic, applying prevention and containment measures, providing swift humanitarian response, as well as taking the first steps towards post-pandemic recovery. They implemented nation-wide measures, but also experimented with bottom-up recovery strategies. Local authorities are an indispensable “ring” in the governance chain necessary to prevent and respond to pandemics and advance a One Health Approach.

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Quatrième révolution industrielle et migrations : comment assurer la transition dans les pays d’origine et de destination ?

Par Jason Gagnon, Économiste du développement et Catherine Gagnon, Stagiaire, Centre de développement de l’OCDE

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Avec l’arrivée de nouvelles technologies qui brouillent les frontières entre sphères physique, numérique et biologique, un changement spectaculaire dans la façon dont nos économies et nos sociétés interagissent, produisent et communiquent est en cours. Et comme nos économies sont aujourd’hui plus que jamais interconnectées, cette révolution industrielle a lieu dans pratiquement tous les coins du monde. Parallèlement, les migrations internationales n’ont jamais été aussi nombreuses.

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The fourth industrial revolution and migration: how to ensure a smooth transition?

By Jason Gagnon, Development economist and Catherine Gagnon, Intern, OECD Development Centre

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A dramatic change in the way our economies and societies interact, produce and communicate is underway as a fusion of technologies blurs the lines between the physical, digital, and biological spheres. And with our economies more globally interlinked today than ever, this industrial revolution extends to practically every corner of the world. Meanwhile another sweeping trend is gaining traction: international migration is at an all-time high as new host countries, routes and freshly skilled workers multiply, and as a young population eager to make a mark on the world continues to grow.

The two megatrends of technology and international migration have the potential to significantly change globalisation as we know it. The Gulf countries offer an illustration of the especially pronounced interaction between both trends. On one hand, Gulf Cooperation Council (GCC) countries have made it a priority to usher in this new economic era. On the other, GCC countries are some of the world’s most dependent countries on migrant labour. How can GCC countries ensure a smooth labour market transition as they shift to this new economic model? And how can the primary migrant countries of origin to the GCC – mostly in South and Southeast Asia – navigate the changes they will face in the main destinations for their labour migrants?

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The debt burden: why ex-post intervention shouldn’t be the default option

By Rodrigo Olivares-Caminal, Professor of Banking and Finance Law at the Centre for Commercial Law Studies, Queen Mary University of London, and Paola Subacchi, Professor of International Economics, Global Policy Institute, Queen Mary University of London

The financial response to the COVID-19 crisis has driven debt building at an unprecedented speed, which has increased the risk of debt distress and the odds of a new debt crisis cycle. Emerging markets and developing economies are most at risk. When the COVID-19 crisis began in February 2020, it demanded extraordinary policy measures to protect lives and provide support to those who had lost their livelihoods. The public debt vulnerabilities for many countries, especially the poorest ones, were already significant at that time, but the subsequent collapse of many economic activities exacerbated the situation. As of 30 April 2021, 29 countries were at high risk of debt distress, and 7 low-income countries had already succumbed to it. Somalia, for example, is currently in debt distress and needs to secure relief to restore debt sustainability.

Emerging markets and developing economies are most at risk because of their exposure to international capital flows and the fact that portions of their debt are issued in hard currencies, namely the US dollar. This leaves them vulnerable to changes in US monetary policy, and so to sudden outflows when risk aversion and international financial volatility are high. Some countries have learned lessons from previous debt crisis cycles – as is evident, for example, in the development of local-currency securities markets which mitigate the risk of foreign-currency borrowing – but such resilience is patchy and far from being systemic.

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Enjeux et défis du financement du développement dans la zone de l’Union économique et monétaire ouest-africaine post-COVID-19

Par Alain Tchibozo, Chef Economiste, Banque Ouest Africaine de Développement – BOAD

Endettement accru par les dépenses liées à la Covid-19

Le recours à l’endettement pour financer les plans de riposte et de relance économique explique principalement le fait que le déficit budgétaire des pays de l’Union Économique et Monétaire Ouest Africaine (UEMOA) se soit accru. Au plan des finances publiques, même en tenant compte d’un redémarrage de l’activité autour de 5.5% cette année (contre 1,5% en 2020), le déficit budgétaire global représenterait en 2021 près de 5,0% du PIB, après 5,4% en 2020. L’accumulation de déficits publics liés au financement de dépenses de fonctionnement des États apparaît de fait comme le principal facteur d’endettement public. Or la détérioration des finances publiques restreint l’accès futur des États à de nouveaux financements. En 2021, le service de la dette intérieure (paiement des intérêts et amortissement du principal) représentera plus de 50% du service total de la dette dans sept des huit États membres de l’UEMOA. En outre, la part des recettes publiques consacrée au service de la dette représente depuis 2020 plus d’1/3 des recettes totales dans sept États. Aussi, la question de la soutenabilité de la dette sera un enjeu crucial pour les États de la zone ces prochaines années.

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Migración urbana y COVID-19: Las ciudades están en la primera línea de una respuesta inclusiva y de la recuperación

Por Samer Saliba, Líder de Proyectos, Mayors Migration Council1

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La comunidad internacional no está haciendo suficientes esfuerzos para apoyar económicamente a quienes más hacen por las personas migrantes, refugiadas y desplazadas durante la pandemia global: los Gobiernos de las ciudades. Aunque numerosas Alcaldías tienen el mandato de atender a las personas en situación de vulnerabilidad, tales como migrantes y residentes desplazados, frecuentemente las ciudades no cuentan con suficientes recursos económicos para responder a las crecientes necesidades de quienes van llegando. Asimismo, los Gobiernos locales de las ciudades han dejado de percibir ingresos debido a los impactos económicos del COVID-19, lo cual este año limita aún más su capacidad de brindar servicios fundamentales a los residentes. Según algunas estimaciones, los Gobiernos de las ciudades experimentarán una pérdida de ingresos de hasta un 25 % en el 2021, precisamente cuando necesitan incurrir en un mayor gasto para impulsar la recuperación y para atender a una población que crece continuamente. En una encuesta reciente, 33 funcionarios a cargo de las finanzas municipales de 22 países de todos los continentes expresaron que ya se observa una disminución del 10 % en el ingreso total y un aumento de aproximadamente 5 % en el gasto. Este “efecto tijera” de los ingresos y gastos de los Gobiernos locales tendrá un mayor impacto en las ciudades de países en desarrollo. Las ciudades africanas, por ejemplo, podrían dejar de percibir hasta un 65 % de sus ingresos en el 2021.      

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Putting metrics to action: global co-operation and the Anthropocene

By Pedro Conceição, Director of the Human Development Report Office and lead author of the Human Development Report

Forest fires in California and Australia. Heatwaves in Europe and India. Snow in Texas. These are only some of the recent extreme weather events that are increasingly ravaging our planet. Climate change is likely playing a crucial role in all of them. Add in COVID-19, which almost certainly sprang from human interaction with wildlife, we have an even clearer warning of the risks of human pressure on the planet. These pressures have had such an impact that many scientists argue that we have entered a new era, the Anthropocene, or the age of humans, in which humans have become a dominant force shaping the planet.

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Revisiting knowledge for development

By Pierre Jacquet, President, Global Development Network

Beyond the short term costs and challenges of the COVID-19 pandemic for developing countries, this post takes a more long-term view, starting from a less discussed lesson of COVID-19, namely, how it has revealed a deficient culture of dealing with uncertainty and the role of science in society. The pandemic has shown both that ignoring science endangers lives and that scientists typically disagree on the best course of action. Science reveals true knowledge, but knowledge always remains incomplete: it therefore cannot deliver a blueprint for action, but it informs decisions under uncertainty and risk mitigation. The real potential of scientific knowledge is in interpretation and judgment. This has important implications for the knowledge-for-development agenda.  

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Frontloading finance can save lives, tackle climate change and generate real impact

By Sony Kapoor, CEO of the Nordic Institute for Finance, Technology and Sustainability (NIFTYS) and Chair of Re-Define

The humanitarian, moral and economic case for development aid has been made eloquently and does not bear repeating. But the stark, ongoing highly inequitable impact of climate change and the COVID-19 pandemic, both of which hurt poor and developing economies the most, has turbocharged the case for more aid and now. However, present levels of aid languish at 0.32% of GDP, or $161.2 billion, less than half the promised amount of 0.7% of GDP. This commitment needs to be at least doubled, but despite the OECD call for a “massive expansion of aid” countries such as the UK are cutting, rather than increasing aid. 

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