New Challenges, New Ideas, New Actions

IMF News, June 24, 2021

Source details

Speaker: IMF Deputy Managing Director Tao Zhang
Event: Caixin Summer Summit 2021
Date: June 23, 2021
Main themes: global recovery from COVID-19; vaccination as priority economic policy; climate change as “our most global challenge”

Assertion: “vaccine policy is the most important economic policy at the moment.”
Observation: global economy has gradually stabilized and begun the march toward full recovery, bolstered by substantial policy support and vaccine availability, particularly among advanced economies.
Risk: increasingly two-track pandemic leading to a two-track recovery, detrimental to global prosperity.
Drivers of slower recovery: slower vaccine rollout; more limited policy support; more reliance on contact-dependent sectors like tourism.
Concern: gradual removal of monetary accommodation in faster-recovering, large economies may have implications for economic and financial stability.
Interim measures while vaccine supply is limited:
- widespread testing and tracing
- therapeutics
- effective public health measures
- ramping up preparations for vaccine deployment

Plan size: $50 billion
Coverage targets:
- vaccinate at least 40 percent of the population in all countries by end-2021
- vaccinate at least 60 percent by the first half of 2022
Required elements:
- additional grants to the Covid-19 Vaccines Global Access Facility (COVAX)
- more surplus doses donated to regions with vaccine shortages
- free cross-border flows of raw materials and finished vaccines
- vigilance against new variants
- expand investment in vaccine production capacity
- diversify vaccine production
- develop contingency plans to handle supply shocks
Economic payoff: the $50 billion price tag could generate an estimated $9 trillion in additional output by 2025
Characterization: “if successfully implemented, the plan will become the best public investment ever.”

IMF preparing a new Special Drawing Rights allocation, described as “unprecedented in its size,” to boost international reserves and liquidity of all member countries.
IMF is considering how to provide greater funding support to all member countries with vaccination needs.

Framing: climate change described as “our most global challenge.”
Goal: take strong policy steps to keep global temperature increase to within 2 degrees.
Policy tools emphasized:
- critical role for carbon pricing
- flexibility to include regulatory and other approaches
- call for an international carbon price floor—possibly differentiated according to each country’s level of development—as a way of achieving multilateral progress
Development and fairness:
- need to identify win-win opportunities for the climate and the economy
- good mitigation policy can often largely pay for itself and further development
- imperative to fulfill commitments to providing climate financing and technology transfers to less developed countries so they will not fall behind

Praise: China has started implementing measures to achieve the ambitious target of carbon neutrality by 2060, while assisting other less developed countries with vaccines and funding.
Call to action: secure the current recovery, maintain economic and financial stability, and create a more inclusive, smarter, and greener future.
Final well-wishes: wishes for a successful Caixin Summer Summit 2021.

Source: Remarks by IMF Deputy Managing Director Tao Zhang, Caixin Summer Summit 2021, June 23, 2021.