IMF discloses factors affecting economic recovery of low-income countries
The IMF has identified some factors that hamper the economic recovery of low-income countries from the effects of the COVID-19 pandemic.
This is as many of the poorest countries in the world are facing the threat of weak recovery and setbacks in their development path.
This disclosure is contained in a report issued by the IMF on Sunday, April 5, 2021, and can be seen on its website.
Some of the factors include access to vaccines. The poorer or low-income countries, face uneven access to vaccines as most of these countries rely almost entirely on the multilateral COVAX facility. This is a WHO-backed global initiative, in collaboration with a consortium of international organizations, aimed at equitable access to vaccines. The initiative is currently set to procure vaccines for just 20% of the population in low-income countries.
Secondly, low-income countries have had limited policy space to respond to the crisis, most especially, they have lacked the means for extra spending.
Thirdly, pre-existing vulnerabilities such as high levels of public debt in many low-income countries and sometimes weak, negative, total factor productivity performance in some low-income countries continue to act as a drag on growth.
The IMF in its presentation estimates that low-income countries will require about $200 billion until 2025 to step up their response to the pandemic, and a further $250 billion to catch up with advanced economies. An additional $100 billion will be needed if risks identified in the baseline scenario materialize. Meeting these needs will require a coordinated, multifaceted, strong response.
With the devastating impact of the coronavirus pandemic still very visible, the low-income countries and even the developed economies are still trying to create a path to economic recovery.
The high debt level of low-income countries even before the pandemic means that only a small portion of its Covid-19 expenditure could be financed through borrowing.