By Creon Butler, Research Director, Trade, Investment and New Governance Models, and Director, Global Economy and Finance Programme, Chatham House and Harald Hirschhofer, Senior Advisor, TCX
Developing countries need external finance on a very large scale to meet the Sustainable Development Goals; the COVID-19 pandemic has not only increased the amount they need but also made it harder to access private funding. This makes public Development Banks more important than ever, especially to catalyse investments by pension funds and other institutions in socially productive assets.
But to achieve this they urgently need to address a long-standing blind spot by giving much greater weight to helping developing countries access the risk management tools necessary to protect their finances against global shocks. Climate change and the increased incidence of pandemics make shocks affecting critical economic sectors, such as commodities and tourism, or the availability of international finance, more likely.Continue reading