The IMF, in its response to the COVID-19 pandemic, recently announced that it has earmarked $1 trillion to “fight COVID-19 crisis”.
Given the language used – “to fight COVID-19 crisis” – the IMF [has] declared COVID-19 crisis as a “war”, and therefore, the reason it has called the $1 trillion allocation a “war chest”.
If the COVID-19 crisis has been declared a “war” by the IMF, possibly by the World Bank as well, it simply means that member countries of both institutions and all countries that are beneficiary to the services of both institutions, agree to the declaration of “war” against COVID-19.
That the COVID-19 pandemic is now a world pandemic, or put simply a “health war“, then it reasons that the world is under war. The COVID-19 WAR!
This, therefore, is arguably the first true world war; a war with one and the same enemy that truly equally threatens and is indeed ravaging the world with the same unprecedented consequences of death and economic destruction; irrespective of the intensity and degree on a national (country) level.
That said, it also means that if the COVID-19 crisis is officially declared and subsequently responded to as a “war” by the whole world, then the world is fighting a “Third World War”. This is what the IMF’s “$1 trillion war chest to fight COVID-19 crisis” really means.
The head of the IMF Kristalina Georgieva recently told a group of journalists during a virtual press conference hosted by the World Health Organization “This is way worse than the global financial crisis and it is a crisis that requires us all to come together”
“Emerging market and developing economies are particularly vulnerable…their health systems are already fragile, and now they have been hit terribly hard economically. The IMF is giving those countries high priority” she further said.
During the same conference Kristalina Georgieva also indicated that “more than 90 countries have so far approached the IMF for emergency funding.”
Rwanda was the first African country to be approved by the IMF Executive Board to receive about US$109.4 million under the Rapid Credit Facility (RCF) to meet the country’s “urgent balance of payment needs stemming from the outbreak of the COVID-19 pandemic.” According to a statement released by the IMF https://imf.org/en/News/Articles/2020/04/02/pr-20130-rwanda-imf-executive-board-approves-disbursement-to-address-covid19…
It is worth noting that, prior to the outbreak of COVID-19 pandemic, Rwanda’s GDP growth rate was projected at 8.1% for 2020. Rwanda’s economy has been one of the fastest growing economies in Africa, and in the world growing at an average of 8.4% per annum over the last decade – 2010 – 2019.
The IMF Executive Board has since approved a US$ 165.99 to the Republic of Madagascar under the same credit facility – the Rapid Credit Facility (RCF), ” to help the country meet the urgent balance of payment needs stemming from the outbreak of the COVID-19 pandemic“
It’s quite reasonable to assume the Rapid Credit Facility (RCF) is drawing from the IMF’s $1 trillion war chest to fight COVID-19 crisis.
Given how the COVID-19 pandemic is increasingly spreading in Africa, and the inevitable negative impact on national treasuries and economies, it’s quite likely that many African countries will inevitably apply for the use of the IMF credit facility.
However, this will put many African countries that qualify and are approved for the IMF’s Rapid Credit Facility funds under enormous pressure and surveillance from the fund, as they must be.
African countries that will and are likely to succeed in the efficient use of the IMF’s COVID-19 credit funds, are those with already existing functional and efficient public resource allocation systems and facilities. Countries with tough and functional institutional internal control systems that make institutional corruption much harder. Countries with a tough stance on corruption, especially the kind of syndicated wanton stealing of public funds that’s quite common in many African countries. Note: this is not to suggest, however, this is an African problem alone.
The COVID-19 pandemic and the IMF’s COVID-19 credit facility funds to African countries have and will, once again, cast African countries in the limelight in so far as they manage public and borrowed funds.
The IMF’s COVID-19 funds will further put enormous demand on African countries for the need for more transparency, accountability and efficient use of credit funds provided by international lending institutions especially for emergency purposes to respond to and deal with crises.
What’s undeniable, however, something further cast out and exposed by the COVID-19 crisis, is that African countries need to work on putting in place equitable systems of [public] resource allocation, and make them, at least, less corrupt than the deeply entrenched and corrupt systems widely common in Africa. There’s no justifiable reason whatsoever, why Africa, with all its natural and human resources, should be place to such widely common dehuminising grinding poverty.
There’s absolutely enough in every African country for everyone, to the extent that no one should or be condemned to live a life of dehumanising grinding poverty and economic misery that defines Africa more than it’s defined by its ability to not only feed itself but the world.
The way forward, post-COVID-19, Africa will need a continental “Economic Recovery Plan” jointly conceived by all countries. The Economic Recovery Plan should seek not only to address the devastating socioeconomic impact of the crisis but also correct the prevailing systemic inefficiencies.
To mitigate the socioeconomic impact of the COVID-19 crisis, it will be imperative that African countries collaborate and work together as a continental force rather than work individually – each concerned with its own affairs. They will need to work together to ensure that the recovery is continental instead of national, i.e, on a national level, to avoid the spillover effect as a failure of some countries to recover from the devastating socioeconomic effects of this crisis destroying world economies.