May 21, 2021

Excellencies,

I would like to thank Prime Minister Draghi, President Von de Leyen and their staff for preparing this vital Summit.

By now we all know there is no durable end to the economic crisis without an end to the health crisis. That means pandemic policy is economic policy, highly relevant for the work of the IMF.  How it is conducted matters to economic recovery. 

It matters, in particular for preventing this dangerous divergence of economic fortunes we have been warning about.  It will only worsen as the gap widens between wealthy countries that have access to vaccines and poor countries that do not, and it will slow down the exit from the crisis for everybody.

IMF staff published today a contribution to the ongoing efforts being made by many others to address the gap in vaccines, diagnostics, and therapeutics many developing countries face—and help bring the pandemic substantially under control everywhere for everyone’s benefit.  It builds on the work of the WHO, World Bank, Gavi, African Union and has three broad elements, at the estimated cost of $50 billion.  

First, vaccinating of at least 40 percent of the global population by end-2021 and at least 60 percent by the first half of 2022. To do so requires additional upfront grants to COVAX, donating surplus doses and free cross-border flows of raw materials and finished vaccines. [glitch]

Second, insuring against downside risks such as new variants that may necessitate booster shots. This means investing in additional vaccine production capacity by 1 billion doses, diversifying production, scaling up genomic surveillance and supply-chain surveillance, and contingency plans to handle virus mutations or supply shocks.

Third, managing the interim period where vaccine supply is limited with widespread testing and tracing, therapeutic and public health measures, and, at the same time, ramping up preparations for vaccine deployment together with any approved dose-stretching strategies.

Of the $50 billion we envisage grant financing of at least $35 billion.  G20 governments have already identified as important to address the $22 billion funding gap noted by the ACT-Accelerator.  This would need to be topped up by an additional $13 billion in grant contributions.

The remainder of the overall financing plan – around $15 billion – could come from national governments, supported by COVID-19 concessional financing, primarily from facilities already created by multilateral development banks.

Importantly, the proposal requires not just commitments but upfront financing, upfront vaccine donations, and upfront ‘at-risk’ precautionary investments. It is essential that all necessary financing is available as soon as possible.

The costs of the plan are dwarfed by the outsized benefits.  As we have been stressing, a faster end to the pandemic not only saves lives, but also could inject the equivalent of $9 trillion into the global economy by 2025 due to a faster resumption of economic activity. And advanced economies—asked to contribute most to this effort—would likely see the highest return on public investment in modern history, capturing 40 percent of the GDP gains and roughly $1 trillion in additional tax revenues.

Strong and coordinated action is the way out of this unprecedented health and economic crisis. With the support of our membership we are working towards making an important contribution to the exit from this crisis by boosting global reserves with $650 billion Special Drawing Rights — particularly important for countries faced with the toughest challenges.  We are stepping up lending where needed, and we are working on debt sustainability.  You can count on us to play our part.

Thank you.