Last week, the world’s economic and financial communities closed their annual meetings – held online this year – on a welcome note. The International Monetary Fund (IMF) has proposed a $ 650 billion increase in the foreign exchange reserves of financially troubled countries, following the deepest global recession in more than a century.
The allowance, known as Special Drawing Rights, allows countries with low U.S. dollar reserves to access that currency and other global currencies to purchase essential supplies in the event of a pandemic, including vaccines. But its size is pale next to the Biden administration’s planned $ 2.3 trillion economic stimulus to restart the U.S. economy, which has been stranded by COVID-19. In this context, the administration intends to ask Congress to authorize significant increases in the budgets of public agencies. Particular emphasis will be placed on strengthening funding and regulatory bodies working in the areas of climate change and environmental protection, public health, racial justice, and scientific and health research.
In doing so, the government is disrupting the practice not only of its predecessor, but also of American governments dating back about four decades. Most of these governments have tended to limit public spending, especially spending on state infrastructure. The Biden administration has acknowledged that the absence of such public spending has severely affected some of the country’s most vulnerable populations. It must now pass this message on to the major global credit agencies such as the World Bank and the IMF. As a major shareholder, it can and should work with the IMF to help prioritize research and university loans.
If the pandemic has taught us anything, it’s that the environment, healthcare, regulation and research are precisely the sectors that must be supported if countries are to emerge stronger during and after the pandemic. They are also essential for achieving the flagship United Nations Sustainable Development Goals (SDGs), which aim to reduce poverty and achieve environmental sustainability. The IMF and its members are all committed to the SDGs, which is another reason why the agency should be helped to adjust its lending criteria to support the know-how needed to meet the targets.
The pandemic risks delaying most of the SDGs by a decade, according to a UN report released at IMF meetings. Take the goal of achieving universal primary education by 2030, one of the closest to achieving before the pandemic. Schools that educate more than 150 million children around the world have been closed for a year, according to data from Johns Hopkins University in Baltimore, Maryland, and UNICEF, the United Nations funding agency for the protection of children’s rights. As the pandemic enters its third wave in many places, it is unclear when these children will be able to return to school.
Progress towards affordable access to further and higher education has also been hampered. Although many institutions offer online learning, students from low-income communities tend not to have access to broadband, personal laptops and smartphones, and therefore are often unable to attend classes. The paradox is that this is happening just as the UN is recruiting universities to help countries meet their SDG obligations. Several of the world’s leading university networks, including the Association of African Universities and the Association of Commonwealth Universities, have encouraged their members to more actively implement the SDGs.
Many researchers have been deeply involved in the SDGs since the launch of the goals in 2015. Researchers have also tracked progress towards the goals and helped countries achieve their individual goals (Z. Xu et al. Nature 577, 74â78; 2020). It is good that universities are asked to do more. But it comes at a time when most are facing financial hardships and when international lenders such as the UK’s Foreign, Commonwealth & Development Office are suddenly and damagingly reducing their support for research partnerships with low- and middle-income countries. intermediate.
When the IMF lends, some countries balance the books by cutting public sector spending, such as energy subsidies or funding for higher education. When this approach was applied to countries in financial difficulty in the 1980s, development economists warned that it would hurt countries’ subsequent economic recovery. They also argued that financing the basic needs of populations should be provided by the state – as is the case in many high-income countries. Countries in Africa and Latin America have suffered greatly from what have been called adjustment or stabilization policies – the spending conditions that countries have to adhere to in order to receive IMF loans.
Richard Jolly, an economist at the University of Sussex near Brighton, UK, and former deputy director of UNICEF, describes how the organization became so concerned that it commissioned a two-volume study, Fit with a human face, highlighting how international lending policies are detrimental to the well-being of children and young people. But, at the time, these concerns clashed with another way of thinking: that prosperity can be achieved through reduced public spending.
Now, as the pendulum seems to be moving in the other direction, IMF shareholders, led by the United States, must allow the agency to help countries achieve the SDGs by lending money to strengthen them. universities, as well as regulatory and health research and policy. care.
International political priorities in finance and economics are entering a new phase, in part because of the pandemic. The US government has indicated that it intends to borrow exorbitant amounts of money; and that it must do so because of its own neglect of those parts of the public sector that are essential to achieve sustainable development, racial equity and social justice.
The Biden administration is rightly reconsidering the country’s previous convictions. It must now also work constructively with the IMF and other institutions over which it has influence to help them do the same.