Flattening the Global Curve

If the rich world fails to act as COVID-19 spreads to poorer countries in Africa, Asia, and Latin America, the economic and public-health consequences could well be catastrophic. What must developed countries do now to help?

In this Big Picture, Gordon Brown, Erik Berglöf, and Jeremy Farrarurge the G20 to coordinate immediate international support, and call for a donors’ conference to provide adequate funding to enable developing countries to fight the pandemic. And Joseph E. Stiglitz says that any rescue plan should include extensive use of the International Monetary Fund’s Special Drawing Rights and suspend poorer countries’ debt service.

Likewise, Ngozi Okonjo-Iweala, Brahima Coulibaly, and other prominent African leaders call for an immediate two-year moratorium on external-debt repayments in order to create the fiscal space that the continent’s governments need to respond to the coronavirus. And Pierre-Olivier Gourinchas and Chang-Tai Hsiehargue that without a comprehensive IMF-backed freeze on debt payments, the pandemic will ignite a firestorm of uncontrolled sovereign defaults among emerging and developing economies.

More generally,Jayati Ghosh says that the IMF can play a critical role in helping to prevent economic catastrophe – but only if it abandons its longstanding neoliberal orthodoxy. And with developing countries in urgent need of large-scale low-cost financing,Stephany Griffith-Jones, Régis Marodon, and José Antonio Ocampoargue that often-overlooked development banks can be a prime source of potential funding if they act boldly.