‘If developing economies found it hard to manage their debts in 2023, they are likely to face even more formidable challenges this year. Though most possess relatively small debt stocks and are not considered insolvent, many are in dire need of liquidity. As long as this remains true, they will struggle not only to manage their debts, but also to invest in the green transition.’ – An excerpt from a January 24 Project Syndicate (PS) published article ‘Developing countries need debt relief to act on climate change’
Pakistan is among those countries which is both among top-ten most climate change vulnerable, and that is also highly debt distressed. Not only that, with inflation running close to 30 percent– year-on-year CPI at 28.3 percent to be precise– and policy rate at 22 percent, the country is also facing high costs of both living, and doing business. Having said that, both under International Monetary Fund (IMF) programmes– where the country is under IMF’s standby arrangement, which is scheduled to end in March, and likely to negotiate another IMF programme after this– and under the influence of Chicago-boys styled policymakers, the country mostly follows austerity-based, pro-cyclical policy that further exacerbates inflationary pressures, reduces economic growth, and in turn, decreases the capacity to reduce debt burden.
Lower growth also means less revenues, especially in the absence of meaningful tax base enhancing focus, that in turn means less fiscal space, which together with over-board monetary austerity means likely negative consequences for increasing domestic production, and exports. Moreover, lower fiscal space, and lack of climate finance has meant seriously low climate change related spending.
Having said that, the fast-unfolding climate change crisis, and its significant relation with the ‘pandemicene’ phenomenon calls for greater multilateral spirit. Sadly, there is little progress on creating effective climate compensation related provision of funds under ‘loss and damage’ fund, meaningful debt relief, and adopting an effective pandemic treaty.
Regarding the progress on adopting a reportedly draft pandemic treaty, a January 4 published article ‘WHO chief warns ‘future generations may not forgive us’ if pandemic treaty not agreed upon: ‘There will be a next time’ pointed out in this regard ‘Future generations may not forgive the World Health Organization’s member nations should they fail to agree on a pandemic treaty, the organization’s chief said Saturday at the Warwick Economic Summit, calling the agreement “mission critical for humanity.” Despite lessons that should have been learned during COVID-19, the world is unprepared for the next pandemic, be it an influenza virus, another coronavirus, or “Disease X”– a term the organization has used since 2018 to refer to a yet-unknown pandemic pathogen, Director General Tedros Adhanom Ghebreyesus said, speaking virtually from Geneva at the summit, held in Coventry, England.’
There is indeed a need to put in place a meaningful pandemic treaty, as highlighted by a February 18 published article ‘The west is sabotaging a global pandemic treaty’ as follows: ‘Virologists, epidemiologists, and public health experts are unanimous in their opinion that humanity got off relatively lightly with the COVID-19 pandemic. …However, at some point, a much more serious pathogen– one, say, with the infectiousness of measles combined with the lethality of Ebola, where some two-thirds of those infected die– could emerge through spillover, accident, or design. It is this ever-present threat, with fresh experience of the world’s catastrophic response to COVID-19 to learn from, that has driven the nations of the world to craft a new, global pandemic treaty. …The aim is a pact that is legally binding under international law to enhance 1) the prevention of pandemics, 2) our preparedness ahead of their emergence, and 3) the response when they do emerge.’
Moreover, an August 10 Guardian published article ‘Can a WHO pandemic treaty help poorer nations in future outbreaks?’ pointed out with regard to an otherwise much-needed pandemic treaty as ‘The draft treaty is aimed at ensuring equity in distributing all that is needed to handle a future pandemic, instead of the coronavirus free-for-all. However, reaching an agreement is tricky, with diverging government interests, reservations on the part of pharmaceutical companies and lingering anti-WHO sentiment from those who opposed lockdowns, masks and vaccines during the pandemic. …The draft political declaration includes references to “global solidarity” and expressions of “concern”… More specifically, it calls for greater access to affordable medicine, including non-branded versions, and for greater support for local and regional production and distribution. It also calls for the WHO to be given the authority and funding it needs to support countries to minimise the risks of a pandemic.’
Similarly, there is little progress on building up climate change related compensations in the ‘loss and damage’ fund, as pointed out by a February 9 published article ‘Rich countries miss key deadline for loss and damage fund launch’ as ‘Higher-income countries have missed a deadline to nominate their board members for the fledgling loss and damage fund, potentially creating delays in the fund’s bid to assist communities experiencing the adverse effects of climate change. After decades of pressure from climate-vulnerable, lower-income countries and years of negotiations, countries agreed to institute the fund at the 28th U.N. Climate Change Conference of the Parties, or COP 28…’
Moreover, lack of multilateral spirit is also quite evident, for instance, by International Monetary Fund (IMF) both in terms of not committing to issuing climate change related special drawing rights (SDRs) on an annual basis, and for a number of years, for highly climate change countries, including Pakistan, and not cancelling its otherwise notorious surcharge policy, which is no more than ‘junk fee’.
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The writer holds PhD in Economics degree from the University of Barcelona, and previously worked at International Monetary Fund. Prior to this, he did MSc. in Economics from the University of York (United Kingdom), and worked at the Ministry of Economic Affairs & Statistics (Pakistan), among other places. He is author of Springer published book (2016) ‘The economic impact of International Monetary Fund programmes: institutional quality, macroeconomic stabilization and economic growth’. He tweets @omerjaved7
