What About Debt Cancellation To Assist Stop Future Pandemics?

Negotiations on a ‘pandemic treaty’ are beginning in earnest inside weeks because the World Well being Group (WHO) distributed the first ‘zero-sum’ conceptual draft of the settlement to member states on Friday – however one of many greatest conundrums is how you can pay to mitigate the subsequent pandemic. 

The COVID-19 pandemic has had a big impression on economies, and 143 of the WHO’s 192 member states are to undertake “austerity measures’ together with public spending cuts subsequent 12 months, whereas Russia’s conflict in Ukraine and local weather crises are additional difficult nation budgets.

The Pandemic Fund, not too long ago set by the World Financial institution, has an annual “funding hole” of $10 billion, the G20 leaders acknowledged on the conclusion of their assembly in Bali on Wednesday.

However this week the Geneva World Well being Hub (G2H2) described the Fund as an “outdated funding mannequin depending on colonial charity” on the launch of its report, “Monetary Justice for Pandemic Prevention, Preparedness and Response”.

“There’s actually no scarcity of cash on this world, however redirecting it to advance well being after the pandemic requires daring motion. The worldwide group as a substitute continues to pursue outdated and opaque fashions, as is the case of the not too long ago established Pandemic Fund,” mentioned Wemos’s Mariska Meurs, co-author of the report. 

The G2H2 report proposes quite a few choices to fund stronger well being programs to fend off pandemics, one being debt cancellation.

A number of rising and growing nations have been in a dire debt disaster properly forward of the COVID-19 pandemic, whereas many extra nations have emerged from the pandemic with increased and extra unsustainable money owed.

“In low-income nations, debt has elevated from 58 to 65% between 2019 and 2021. Thirty nations in sub-Saharan Africa have seen a debt-to-GDP ratio exceeding 50% in 2021,” in keeping with the report.

“Analysis performed on 41 nations exhibits that these with the best debt funds will spend a mean of three% much less on important public companies in 2023 than in 2019,” in keeping with the G2H2 report.

As well as, between 75 million and 95 million individuals can be pushed into excessive poverty by the tip of 2022, in keeping with the World Financial institution.

Debt cancellation and local weather reparations

“If the G20 had cancelled all funds due in 2020 from the 76 most indebted nations, this could have liberated $40 billion in direction of a pandemic response. If the cancellation had included 2021, the quantity would have been $300 billion. Debt is a virus, and debt cancellation is the vaccine the world wants earlier than the debt disaster explodes,” mentioned Nicoletta Dentico, G2H2 co-chair and report co-author.

Debt cancellation isn’t such an outlandish thought in gentle of the “loss and damages” reparations that rich industrialized nations owe to growing nations for the devastations attributable to their greenhouses gases emissions, the report argues.

Whereas the World Financial institution retains speaking concerning the “debt disaster”, it’s the northern nations which might be indebted as “it’s their ecological debt that must be paid”, mentioned Dentico.

World warming prompted $6 trillion in world financial losses between 1990 and 2014, and it was time for “monetary justice”, she added.

Well being cuts within the title of ‘austerity’

Isabel Ortiz, Director of the World Social Justice Program at Joseph Stiglitz’s Initiative for Coverage Dialogue at Columbia College, mentioned that there was a “tsunami of austerity cuts” forward – but these had at all times resulted in cuts to the well being sector which set nations again.

Earlier than the Ebola outbreaks in West Africa in 2014, the Worldwide Financial Fund (IMF) had compelled Guinea, Liberia and Sierra Leone to undertake austerity measures, together with limiting the variety of well being employees that they might rent and capping well being employees’ wages, which then affected their response to Ebola, in keeping with the report.

G2H2 co-chair Baba Aye, from Public Companies Worldwide, mentioned that austerity measures as a part of fiscal consolidation had largely led to “an enormous deterioration of well being circumstances for whole populations”. 

“This financial mannequin has enslaved world South nations to a number of monetary dependencies, constricted their fiscal coverage area, distorted their financial and human improvement and impoverished them,” mentioned Aye.

Austerity often went with the commercialization and privatization of public well being companies – but “individuals suffered essentially the most throughout COVID-19 the place there was privatized healthcare or funding cuts”, added Aye. 

Regardless of this, the World Financial institution has rolled out its “private-first” method – together with in well being – via its “maximizing finance for improvement technique”, added the G2H2.

In the meantime, the IMF, after a quick spending increase through the Covid-19 pandemic, has returned to pushing for ‘fiscal consolidation’ in nation applications and loans, in keeping with the report.

However there are higher alternate options to austerity-related public spending cuts, mentioned Ortiz, together with growing the taxation of companies and rich people. 

“For example, we are able to improve taxes on company earnings, monetary actions, wealth, property, pure assets, and digital companies like Amazon,” mentioned Ortiz.  

Argentina, Iceland, Spain have introduced particular taxation of the windfall earnings of the vitality sector, she added.

“All of the human struggling attributable to austerity cuts could be averted. There are alternate options. Even within the poorest nations, governments can improve their budgets to make sure high quality public companies and common social safety by financing choices akin to fairer taxation, lowering debt and illicit monetary flows,” mentioned Ortiz.

Illicit monetary flows to tax havens

Illicit Monetary Flows (IFFs) are one more drain on public assets that may solely be tackled with radical motion, in keeping with the G2H2. 

Many of those flows concerned the expatriation of earnings from the nations the place they have been generated to tax havens.

The Jap and Southern African area misplaced a staggering $7.6 billion in tax income in 2017 alone, on account of “base erosion and revenue shifting to tax havens”, in keeping with the report.

On the UN Normal Meeting in 2022, the Africa Group tabled a draft decision calling for negotiations in direction of a UN conference on tax cooperation, constructing on the long-standing name by G77 & China to determine an intergovernmental course of on the UN to deal with world tax abuse. 

“This initiative ought to no less than be receiving a robust indication of help within the context of the Intergovernmental Negotiating Physique (INB) for the pandemic accord on the WHO,” mentioned the G2H2.