Bonds, loans, debt-swaps and taxes
The ACT A plan to ride out the pandemic
The European Commission-backed ACT Accelerator [ACT A] which has the private sector at the table, has drawn up extensive plans to address the acute scarcity of resources to fund the response to pandemic. Measures include issuing social bonds, grants, a sovereign insurance pool, and even includes the consideration of a “global transaction tax”. These plans were first made public at a meeting of the ACT Accelerator Facilitation Council earlier this week.
The ACT A needs more than US$27 billion to effectively address the pandemic globally. This is a fraction of the stimulus packages rolled out by countries around the world. Consider that the new Biden administration has set aside US$400 billion to address the pandemic in the U.S. alone. (Of the US$1.9 trillion stimulus package, the COVID-19 plan stands at $400 billion)
Compared to the early days of the pandemic response there now appears to be a recognition that there are limits to the use of funds from the Official Development Assistance. Discussions are now focusing on getting ACT A funding by tapping into treasuries in order to have access to these big stimulus plans of countries.
The ACT A boasts of lining up more than more than 2 billion vaccine doses in 190 countries, making available Rapid Diagnostics (RDTs) with access to more than 375 million low-cost tests for LMICs and 2.9 million courses of Dexamethasone, the first and only proven therapy for severe COVID-19. But clearly this has simply not been enough. With more than 2 million lives lost as a result of COVID-19 and 100 million plus confirmed cases, the ACT A is under pressure to shore up financing and change strategy.
Three shifts will inform this change in strategy, according to officials: “the era of COVID-19 vaccines”, the challenges posed by the variants of SARS-CoV-2 and the recognition that “international collaboration is increasingly fragmented & underinvesting in global solutions”.
Image credit: A Financial Framework for ACT Accelerator, February 9, 2021
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