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Boldly Finance Recovery to Build Forward Better



Opinion by Jomo Kwame Sundaram, Anis Chowdhury (sydney and kuala lumpur)Tuesday, June 22, 2021Inter Press Service

Anis Chowdhury

Renewed North-South divide

The Economist believes death rates in developing countries are much higher than officially reported – 12 times more in low- and middle-income countries (LMICs), and 35 times greater in low-income countries (LICs)!

Rich countries’ ‘vaccine nationalism’ and protection of patent monopolies have only made things worse. After “passing round the begging bowl”, recent G7 promises by the world’s largest rich countries – including a billion vaccine doses – are “too little, too late”, as emerging details confirm.

Rich countries’ aid cuts during the pandemic have only rubbed salt into an open wound. Without meaningful debt relief by lenders, developing countries are falling further behind once again.

Borrow domestically

Now, developing countries must mobilise funds domestically for relief and recovery as foreign exchange is only needed to finance imports. Central bank governors have long agreed that “the scope for relying more on domestic markets, and less on international markets, is considerable”.

Government bonds issued for domestic borrowing are widely considered safe savings instruments. They thus also support and develop domestic capital markets, although limited incomes and savings ensured thin markets in most developing countries.

Hence, governments have to borrow from central banks to meet their financing needs. As government debt is denominated in the domestic currency, repayment is manageable. With borrowing from central banks contributing to a country’s money supply, governments can borrow as needed.

Jomo Kwame Sundaram

Central banks lend

Central bank financing of government borrowing for development expenditure is nothing new. It was widespread until restrained in recent decades by pressure from donors, financial markets and institutions, including the IMF and World Bank.

Instead, the new policy advice has promoted ‘central bank independence’, ‘inflation targeting’, ‘debt limits’, ‘balanced budgets’ and prohibiting direct borrowing from central banks.

After the 2008-2009 global financial crisis, rich countries pursued ‘unconventional’ monetary policies, with central banks buying government and corporate bonds. But few developing country governments have resorted to borrowing from central banks.

Even talk of such policies evokes fears of ‘runaway inflation’, unsustainable ‘debt build-up’, balance of payments crises and ‘crowding out’ the private sector. These concerns have limited such borrowing, unnecessarily constraining government spending.

Inflation bogeyman

Undoubtedly, ‘hyper-inflation’ – exceeding 35% to 40%, usually due to rare events such as war or state collapse – has adversely affected growth historically. But Indonesia and South Korea both grew at 7-8% annually for over two decades with double-digit inflation rates exceeding 10%.

Government spending is not the only alleged cause of inflation. Inflation may also be attributed to shortages, e.g., the pandemic has disrupted much production and supply.

Inflation is typically unavoidable in fast-growing economies experiencing rapid structural change as some sectors expand faster than others, with some even contracting.

Such inflation is likely to decline as economic imbalances, frictions and disruptions ease. Inflation, it should be remembered, is double-edged, also reducing debt burdens while encouraging spending, rather than saving.

Crowding-out or in?

Government spending is needed to keep economies ticking, especially as contemporary recessions are partly due to government policies to contain the pandemic. State inaction would only worsen mass unemployment, bankruptcies, etc.

When a government spends, the central bank credits the commercial bank accounts of recipients. Thus, expansionary fiscal policy augments private banks’ cash reserves.

This, in turn, increases market liquidity unless the authorities offset or ‘sterilise’ such effects, e.g., by selling government or central bank or short-term securities, or associated derivatives such as ‘re-purchase’ agreements.

Then, instead of pushing up interest rates, the central bank discount rate declines, exerting downward pressure on retail interest rates. Hence, claims that government spending ‘crowds out’ private investments tend to exaggerate.

And if a government borrows for infrastructure investment or skill development, overall productivity increases, and business costs decline. Hence, debt-financed infrastructure and public social investment would crowd-in, rather than crowd-out private investment.

Public expenditure can thus break the vicious circle of reduced spending and greater uncertainty. Also, government spending on healthcare, education, housing, infrastructure and the environment enhances sustainable development.

Balance of payments fears

Expansionary fiscal measures, thus financed by domestic borrowing, are said to worsen balance of payments problems in several ways. First, higher interest rates attract more capital inflows, causing the exchange rate to appreciate, making the country less export competitive.

Second, higher domestic demand implies more imports for both consumption and production. Third, rising inflationary pressures make domestic products more expensive and imports more attractive.

But such arguments against domestic debt-financed fiscal expansion contradict crowding-out claims. If such government expenditure reduces private spending, then excess demand will shrink, reducing inflation and balance of payments problems.

Governments can also use countervailing measures, such as restricting luxury imports and managing capital flows, to maintain a competitive exchange rate and promote exports.

Fighting windmills of the mind

Debt-GDP thresholds recommended by ‘international finance’ are not based on optimality or financial stability criteria. An IMF study emphasised that the so-called ‘debt limit’ “is not an absolute and immutable barrier … Nor should the limit be interpreted as being the optimal level of public debt”.

The 60% limit for developed countries was arbitrarily set. Presented as the upper bound for European Community countries, it was actually only the average debt-ratio for some powerful members, but not Italy and others!

The IMF’s 40% debt-GDP ratio limit for developing and emerging market economies is only for external, not domestic debt, and certainly not for total government debt, as often implied.

The Fund has acknowledged, “it bears emphasizing that a debt ratio above 40 percent of GDP by no means necessarily implies a crisis – indeed … there is an 80 percent probability of not having a crisis (even when the debt ratio exceeds 40 percent of GDP)”.

In fact, debt is deemed sustainable as long as national economic growth is greater than the interest rate. For international finance, debt sustainability concerns focus on external debt, typically denominated in foreign currencies.

Governments can more easily ‘roll over’ domestic currency debt, although interest costs may be higher. But borrowing in domestic currency should not enable fiscal irresponsibility.

Hence, the key challenge is to ensure the most effective and productive use of such borrowed funds. Pragmatism requires considering capacities, capabilities and checks against abuse and wastage.

Build forward better

Instead of ‘building back’ the unsustainable and unfair status quo ante before the pandemic, developing country governments should now selectively target government expenditure to ‘build forward better’, emphasising measures to achieve sustainable development.

Borrowing to finance recovery and reform should incorporate desirable changes, e.g., working in new ways, creating new activities, accelerating digitalisation, revitalising neglected sectors and enhancing sustainability.

Developing country governments must use appropriate measures to finance recovery programmes to fully realise the transformative potential of pandemic-induced recessions to build more resilient and inclusive economies.

All this requires policy and fiscal space. To progress, governments must reject the received policy wisdom that has kept them enthralled for decades.

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© Inter Press Service (2021) — All Rights ReservedOriginal source: Inter Press Service

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Digital Media on the Frontline: Supporting the Ones who Support the Rest



Sarita Das found some solace in creativity on the Fuzia platform (handout Fuzia) by Fairuz Ahmed (new york)Tuesday, June 22, 2021Inter Press Service

Khan has not seen her family for more than six months, she said in an exclusive interview with Inter Press Service (IPS).

“I was working extra hours and saw death up close. It was nerve-wracking to see my patients at this stage. It has been over six months that I have not seen my family,” she says, recalling the impact of the disease on herself and the community she serves. “The only solace I had was to talk with my mother, who is 67, and with my nieces over Facetime.”

The COVID-19 pandemic altered the way we work, engage, and communicate. The crisis put communication at the front of all priorities and has made it imperative to have real-time information available. For most organisations – online or offline – efforts to keep people informed and engaged became the new “must-haves”.

Shraddha Varma, the co-founder of online platform Fuzia and a resident of Maharashtra, India, where the COVID-19 pandemic hit hardest, says the impact on frontline workers was the worst.

“The situation was already bad as we were recovering from the first wave of the coronavirus, but (then) it went out of control during the second wave. It had catastrophic effects on the world, especially with frontline workers,” Varma said. “They had to act as shields to keep us safe. Moreover, they faced isolation, stress and had to cope up with all the chaos surrounding them.”

Discussing how Fuzia, a global platform aimed at connecting humans in a non-judgmental space, supported frontline workers, Shraddha says the platform made a point of standing beside those who risked their lives each day.

“Fuzia was able to assist women frontline workers all over the world with creating events, information sessions, live connections, and we served them with a space to speak, learn and even vent. We wanted to have their backs and be there as a platform where they can engage and have some comfort.”

Khan says the isolation from family and community was devastating but being connected helped.

“I also used to speak with other doctors and learn about the latest updates on a few social media platform groups. Seeing people all around the world sharing their stories during the pandemic, I could connect and realign myself.”

A recent study by the International Labour Organisation (ILO) dealt with both frontline worker stress and the additional burden employees often felt working from home and splitting their roles between work and family.

Sarita Das found some solace in creativity on the Fuzia platform (handout Fuzia)

Frontline workers were most concerned about “increased workloads, longer working hours, and reduced rest periods”.

In addition, the study found “they may be worried about getting infected at work and passing the virus to family, friends, and others at work, in particular, if appropriate protective measures are not in place.”

For those working from home, there was a desperate need for support. The ILO study found that 41 percent of people who worked from home “considered themselves highly stressed, compared to 25 percent of those who worked on-site.”

Fuzia wasn’t alone in recognising the needs of workers, and big tech companies like Amazon and Facebook prioritised assisting and informing the frontline workers with updated news, data, safety protocols, vaccination information, and more.

For non-profit charitable organisations, Facebook launched Workplace for Good, helping organisations like Save the Children, It Gets Better, War Child and others. It also helped small to large organisations stay connected with their employees.

Amazon invested in supporting employees, customers, and communities during the pandemic, from enhancing safety measures to increasing paid time-off and helped to ensure that their employees and their communities have access to COVID-19 vaccinations and testing.

Amazon provided more than $2.5 billion in bonuses and incentives for teams globally in 2020 and established a $25 million relief fund for partners such as delivery drivers and seasonal associates facing financial hardship or quarantine.

Fuzia also recognised that many had lost jobs and collaborated with Wishes and Blessings, an NGO raising funds for their COVID relief project operating in seven states in India. The initiative was aimed at serving three meals a day to thousands of homeless and daily wage earners and providing nutritional aid to about 4000 at-risk families affected by the lockdown. The project was active in Assam, Delhi, Jharkhand, Tamil Nadu, West Bengal, Uttar Pradesh, and Uttarakhand.

The shift to the virtual world or work resulted in burnout among employees. An article published last year in Microsoft Stories Asia documented the increased burnout as workers struggled to find a work-life balance.

The decrease in work and personal life boundaries added stress. On average, close to one-third of workers in the Asia Pacific cited increased rates of burnout. Surveying over 6,000 information and frontline workers across eight countries globally, including Australia, Japan, India, and Singapore, the study found that Singapore and India were the top two countries where workers complained of burnout.

Sarita Das, a Fuzia user, says the site helped her during the pandemic.

“Communicating with other Fuziaites really helped me get out of my head. There was so much bad news circulating online that it increased my anxiety levels,” she said, finding the creative element in the site most soothing.

“I found a way to relieve my stress and joined the Fuzia Talent events. I found painting a much better distraction than browsing online. It requires focus, stops you from obsessively checking the news and gives you a sense of accomplishment as you paint your own creation.”

This article is a sponsored feature.

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© Inter Press Service (2021) — All Rights ReservedOriginal source: Inter Press Service


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Link between education and well-being never clearer, UN pushes for ‘health-promoting’ schools



Tuesday, June 22, 2021UN News

There has been increased stress, anxiety and other mental health issues, while an estimated 365 million primary school students have gone without school meals, according to the World Health Organization (WHO) and the UN specialized agency handling education issues, UNESCO.  

Based on a set of eight global benchmarks, Global Standards for Health-promoting Schools, calls for all classrooms to promote life skills, cognitive and socioemotional skills and healthy lifestyles for learners.   

WHO and @UNESCO urge countries to make every school a health-promoting school, following the Global Standards for Health-promoting Schools that aim to ensure all schools promote life skills, cognitive & socioemotional skills & healthy lifestyles.

— World Health Organization (WHO) (@WHO)

June 22, 2021

“These newly launched global standards are designed to create schools that nurture education and health, and that equip students with the knowledge and skills for their future health and well-being, employability and life prospects”, said WHO Director-General Tedros Adhanom Ghebreyesus.  

Linking schools and health 

Clear evidence shows that comprehensive health and nutrition programmes in schools, have significant impacts among students.  

“Schools play a vital role in the well-being of students, families and their communities, and the link between education and health has never been more evident”, Tedros added. 

The new standards, which will be piloted in Botswana, Egypt, Ethiopia, Kenya and Paraguay, contribute to WHO’s target of making one billion people healthier by 2023 and the global Education 2030 Agenda coordinated by UNESCO.  

“Education and health are interdependent basic human rights for all, at the core of any human right, and essential to social and economic development”, said UNESCO Director General, Audrey Azouley.   

Making the case 

School health and nutrition interventions in low-income areas where impediments such as parasitic worms or anemia are prevalent, can lead to 2.5 years of additional schooling, according to the UN agencies. 

Moreover, malaria prevention interventions can result in a 62 per cent reduction in absenteeism; nutritious school meals upped enrolment rates by nine per cent, and attendance by eight per cent on average; and free screening and eyeglasses have raised the probability of students passing standardized reading and math tests by five per cent.  

And promoting handwashing has cut gastrointestinal and respiratory illnesses between 21 and 61 per cent in low income countries, resulting in fewer absentees.  

“A school that is not health-promoting is no longer justifiable and acceptable”, said Ms. Azouley.   

Promote health in schools 

Comprehensive sex education encourages healthier behaviour, promotes sexual and reproductive health and rights, and improves outcomes such as a reduction in HIV infection and adolescent pregnancies, WHO and UNESCO said. 

A school that is not health-promoting is no longer justifiable and acceptable — UNESCO chief

By enhancing water and sanitation (WASH) services and supplies in school, as well as educating on menstrual hygiene, girls can maintain themselves with dignity and may even miss less school while menstruating. 

“I call for all of us to affirm our commitment and role, to make every school a health-promoting school”, underscored the UNESCO chief. 

Upping the standards 

The Health Promoting Schools approach was introduced by WHO, UNESCO and the UN Children’s Fund (UNICEF) in 1995 and adopted in over 90 countries and territories.   

However, only a small number of countries have implemented it at scale, and even fewer have effectively adapted their education systems to include health promotion. 

© UN News (2021) — All Rights ReservedOriginal source: UN News

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Time running out to prevent ‘worst case scenario’ arising in Afghanistan



Tuesday, June 22, 2021UN News

From politics to security, the peace process to the economy, Deborah Lyons, Special Representative and Head of the UN Assistance Mission in Afghanistan (UNAMA), said the “possible slide toward dire scenarios is undeniable”. 

“The relentless spirit of the Afghans and their incredible resilience is being severely tested”, she said, reminding that what happens there is “of global consequence”, and the Security Council needed to be fully aware of the gravity of the situation.  

“There is only one acceptable direction for Afghanistan – away from the battlefield and back to the negotiating table,” UN envoy @DeborahLyonsUN told Security Council today on the situation in #Afghanistan. Full remarks here:

— UNAMA News (@UNAMAnews)

June 22, 2021

Unfolding reality 

She described the mid-April announcement, led by the United States, of troop withdrawal after two decades of war as a “seismic tremor” for the country, which had happened unexpectedly fast.  

The decision to pull out was part of the February 2020 agreement between the US and the Taliban to create space for peace among Afghans, instead, “actions on the battlefield have been far greater than progress at the negotiating table”, she added. 

She told ambassadors that the public and the diplomatic community in Kabul have been “alarmed at the lack of political unity”, which must be addressed or risk contributing to further Taliban territorial advances.  

Taliban advance 

Through its intensified military campaign, the Taliban has taken more than 50 of Afghanistan’s 370 districts since the beginning of May. 

“Most districts that have been taken surround provincial capitals, suggesting that the Taliban are positioning themselves to try and take these capitals once foreign forces are fully withdrawn”, warned the Special Representative, calling it “a tragic course of action” that would lead to “increased and prolonged violence” and threaten to destroy much of what has been built and hard won over the past 20 years.  

However, she noted that any efforts to install a militarily imposed Government in Kabul would “go against the will of the Afghan people and against the stated positions of the regional countries and the broader international community”. 

Multiple crises 

Meanwhile, nearly one-third of Afghans face emergency levels of food insecurity, as drought worsens, and internal displacements increases. 

“The World Bank has estimated that as a result of the conflict, and the severe third wave of COVID, the drought, the weakened social fabric, and other factors, Afghanistan’s poverty rate could rise from 50 per cent to more than 70 per cent”, warned Ms. Lyons.  

Yet, despite highlighting the importance of international humanitarian aid, recent contributions toward the 2021 appeal for $1.3 billion, remains only 30 per cent funded. 

Civilian casualties 

In the first quarter of the year, civilian casualties increased by 29 per cent compared to that of last year, the UNAMA chief said, noting that women casualties increased by 37 per cent and children by 23 per cent. 

“Parties must immediately…implement civilian protection measures”, she stressed. 

And preserving women’s rights remains “a paramount concern” that must not be used as “a bargaining chip at the negotiating table”, added Ms. Lyons. 

“Human rights are not negotiable”, she underscored, calling on the international community and regional countries to “reiterate the importance of these rights in the peace negotiations”. 

The relentless spirit of the Afghans and their incredible resilience is being severely tested — UN Special Representative

Ticking clock 

The UN official said there was barely time left “to prevent a worse-case scenario from materializing”, pointing to the reality that “increased conflict in Afghanistan means increased insecurity for many other countries, near and far”. 

“A fragmented conflict creates a more permissive environment for terrorist groups to recruit, finance, plan and conduct operations with a global reach”, she attested, adding that one of UNAMA’s key objectives is to “continue to work with all partners”. 

Any future Government will need international engagement and support, she said, upholding that this is “not the time to weaken our resolve or, worse, to contribute even inadvertently to the ongoing signals of despair”. 

“There is only one acceptable direction for Afghanistan…away from the battlefield and back to the negotiating table”, concluded the UNAMA chief. 


Ghada Fathy Ismail Waly, Executive Director, UN Office on Drugs and Crime (UNODC) briefed ambassadors on cooperative agreements between her agency and UNAMA, including anti-corruption measures.   

Recalling the political declaration from the General Assembly’s discussion on corruption, she highlighted UNODC’s cross-border efforts to combat drug-related crimes and preserve Afghan’s “hard won gains.” 

Ms. Waly also drew attention to alliances between criminal and terrorist elements pointing out that they have yielded the world’s highest levels of casualties from terror attacks.   

Drug crops 

Noting that the pandemic had not impacted large poppy harvests to fuel the world’s supply of heroin, Ms. Waly linked the low prices to the degree with which the “illicit economy threatens peace.”    

She urged that “evidence-based prevention and treatment” for narcotics be made a priority and called better guidance for Afghan police “imperative”. 

Against this backdrop, the UNODC chief stressed the need for prompt action in the countryside to help limit production.

Click here to watch the meeting in its entirety.

© UN News (2021) — All Rights ReservedOriginal source: UN News


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