During the COVID-19 crisis, swaps between central banks played a major role in providing short term liquidity – accounting for almost 95 per cent of the value of transactions provided by the Global Financial Safety Net (GFSN). In the discussion below, we set out a description of these swaps, the role they play and how they came to be so important.
This note reports work to prepare a baseline scenario and two alternative scenarios for analysis of finance and development issues facing developing countries in the aftermath of the COVID19 crisis.
Domestic resource mobilization has received great focus among developing countries due to role it plays in financing development objectives with minimal reliance on foreign aid. The significance of domestic revenue mobilization has been emphasized in the pursuit of development goals as set out in the Agenda 2030 for Sustainable Development and in the African Union’s Agenda 2063. The achievement of these development goals hinges on Africa’s ability to mobilize sufficient, predictable and timely financial resources.
This paper focuses on the effect of the pandemic on economic growth, sectoral value-added, the external sector both from Ethiopia and global perspective based on the UN Global Policy Model analysis. Three scenarios were envisaged, in which the effect of COVID-19 is compared to what would have been the economic condition without COVID-19. The analysis shows that the macroeconomic effect of COVID-19 in Ethiopia is to reduce growth, exports, imports and public revenue.
The analysis in this study attempted to show the macroeconomic and social effect of the COVID-19 pandemic on GDP and sectoral GDP growth, including the external sector, on a small mineral dependent economy in Africa -Zambia.
This paper assesses the socioeconomic impacts of Covid-19 in three South Asian economies -- Pakistan, Afghanistan, Sri Lanka -- and corresponding fiscal policy responses to mitigate these impacts. Further, it appraises the sufficiency of these fiscal policy responses to support the economic recovery in respective economies. It also estimates fiscal needs to finance the economic recovery and assesses existing fiscal space to meet the fiscal needs.
The COVID-19 pandemic led to an unprecedented contraction in the global economy that is likely to result in large fiscal deficits and inflated debt positions across countries. Stringent economic lockdown measures that started in China and were implemented in varying degrees in almost all countries of the world slowed down trade and economic activity.
The debt of developing countries continued to rise in 2019—albeit at a slower pace—and, with it, the risks to debt sustainability. Forty-four per cent of low-income and least developed countries (LDCs) are currently assessed as being at high risk of external debt distress or already in debt distress. COVID-19 and related global economic and commodity price shocks could significantly increase this number.
The world economy has gone into a freefall due to the COVID-19 pandemic. At the same time, policy-makers have a broader range of
institutions to draw on for international liquidity support than before the global financial crisis 2008/09. Since the 2008/09 crisis, the
so-called Global Financial Safety Net (GFSN) of institutions for short-term crisis finance has evolved into an uncoordinated patchwork
of global, regional, and bi-lateral sources of support that lacks the resources to adequately prevent and mitigate the kinds of financial
instability we are now witnessing.
Responding to – and recovering from – the shock of the pandemic requires enhanced capacity to diagnose fragilities, identify resources and design appropriate policy responses. Toward these aims, this policy briefing highlights 2 tools – the Global Financial Safety Net and the Sustainable Development Finance Assessment, both outputs of the DA-Project, which provide more information on short-and long-term financial alternatives for developing countries. In this context, the role that a new SDR allocation can play is also explored.