No lost generation : can poor countries avoid the Covid trap ? | Kristalina Georgieva | Business | The Guardian
Just as people with weak immune systems are more vulnerable to the virus, so low-income countries with weak fundamentals are more prone to its economic effects. More than half of these countries were already at high risk of – or actually in – debt distress before the crisis began.The pandemic has exacerbated this with a poisonous cocktail of external shocks: sharply falling exports and commodity prices, collapsing trade, evaporating tourism and less capital inflows. Remittances, which are the main source of income for many poor families, have been hit hard – by almost 20% in countries such as Bangladesh.It is urgent that we act now to prevent “scarring” – long-term loss of human and economic capacity – in the poorest countries. Most importantly, we must secure access to opportunities – education, jobs, financing to start businesses – for the generation of young people upon whom the future of these countries depends. What needs to be done?
First, governments must prioritise health for a durable exit from the pandemic. Saving lives and saving livelihoods are two sides of the same coin. Given that lockdowns are difficult to sustain, this means combining investments in treatment capacity with targeted measures such as social distancing and contact tracing, and with an emphasis on the most vulnerable, including elderly people. Vietnam and Cambodia are examples of where this is happening.
Second, economic measures – especially fiscal ones – should be even more focused. The quality and effectiveness of domestic resource mobilisation and spending are at a premium. For example, protecting education is critical to avoid permanent damage to young people’s prospects. And there must be zero-tolerance of corruption. The crisis has exposed structural weaknesses in social protection systems and offers an opportunity to build stronger systems that can reach vulnerable populations.