A prescriptive path forward for saving struggling countries’ economies

When the heads of all the agencies at the United Nations come together and find consensus on something, their advice is worth heeding. Recently, they did just that, issuing an emergency fund appeal and urging a rapid and coordinated response to COVID-19 to prevent the destabilization of poor countries’ finances. 

The latest report out of the United Nations System — authored with the International Monetary Fund, World Bank Group and more than 60 UN agencies and international institutions — issues a dire warning and goes above and beyond anything that’s been offered in response to the coronavirus.

Three policy fronts, in particular, are worth heeding. The first is a globally coordinated stimulus package that provides immediate and much-needed aid for countries with the least developed health care systems. The second is an urgent stopgap measure to halt the hemorrhaging in emerging markets and push the private sector to reinvest in these developing nations (and more sustainably this time). The third is to rebuild, post-COVID, in a way that improves prevention capacities, resilience, and risk-readiness.

On the first front, while many nations are rolling out individual stimulus packages to keep unemployed communities, vulnerable populations, and struggling businesses afloat during the COVID-19 crisis, there is a clear need for global coordination that goes above and beyond national responses to the pandemic. We have already seen proof that the world is too interconnected to address this pandemic in silos. An affluent nation’s ability to recover will ultimately be only as strong as the weakest health system’s ability to respond to this crisis.  

If we want to really help these countries, we’d immediately suspend debt payments from countries about to get hit by, or already suffering from, the coronavirus due to their underdeveloped health care systems. That G20 countries recently suspended debt payments from the world’s poorest countries is a start, but more is needed — from China and others — if we want to prevent a debt crisis, which we’re quickly hurtling towards. Already, 44 percent of least developed and other low-income developing countries are currently at high risk or in debt distress, which represents a doubling of debt risk in under five years.  

Equally important is the immediate reversal of declining aid to these least developed countries. They’re going to be hit the hardest — socially and economically — by the pandemic. Unless we ramp up public health and social protections — to bolster their social safety net — they’ll be unable to effectively tackle the virus. Overseas development assistance has been in decline (down nearly $150 billion in 2018) and if it continues unabated will pose serious problems long after the pandemic peaks. 

This backslide must be arrested now before further erosion undermines all gains made in the last few decades. The top United Nations humanitarian aid official, Mark Lowcock, recently announced the tripling of the organization’s humanitarian aid appeal. To help the most vulnerable populations, just one percent of the world’s richest nations’ stimulus packages is needed. Without that contribution, far greater expenditures would be required to address the global humanitarian crisis.   

On the second front, it’s time to strengthen the global financial safety net — especially for emerging markets, which have lost nearly $90 billion recently as investors withdraw their capital. That’s the largest outflow ever recorded, and that poses a huge problem for developing nations going forward, especially as they respond to COVID-19 with increasingly limited resources.

If we are to stop this hemorrhaging, we need the likes of the financial heavyweights — like the 30-plus investors who recently launched the Global Investors for Sustainable Development Alliance — to do exactly this. Allianz, Citigroup, UBS, Bank of America and others pledged to increase the supply of investments in these developing countries — the ones hardest hit right now from COVID-19. They also pledged to enhance the sustainable impact of those dollars. There’s no better time to prove that than now when the world is in desperate need of more sustainable practices.

On the third front, COVID-19 makes clear the need for a build-back that’s more resilient, more risk-ready and more prevention-oriented. If we are to recover sustainably, we must address inequalities — which are painfully apparent in this pandemic — and improve social protection systems. One way to do that is by building basic digital access across the world’s most vulnerable communities. As the coronavirus makes clear, that digital groundwork is incredibly helpful in preventing and slowing coronavirus flare-ups and spreads. (The nations that were most successful in shutting down their virus spread relied heavily on digital technology.) Additionally, disparities in digital learning at home and abroad are becoming painfully apparent as COVID spreads. This must be addressed.

Another way to build back better is by adopting sustainability risk disclosures and establishing sustainability standards across the investment community so that we can verify how the industry is contributing to sustainable development.  We must learn from these deadly viruses when they take root in unsustainable business environments and increase vulnerability. 

Climate change is no different. The less sustainable the industry, the worse the crisis becomes. Global disclosures and standards would go far in putting us on a more sustainable path with fewer deadly — and economically devastating — health and environmental crises.

We know how to right this ship, and the upcoming G7 Summit in June, as one example, provides an opportunity to forge a coordinated and targeted path out of this public health crisis. This latest UN report, meanwhile, paints a responsible path forward. It’s about time we listen and before we lose any more capital: financial, human or natural. 

Rep. Gregory Meeks (D-N.Y.) is a senior member of the House Foreign Affairs Committee and the House Committee on Financial Services. Michael Shank is the communications director for the Carbon Neutral Cities Alliance and adjunct faculty at NYU’s Center for Global Affairs.