Some say there is a trade-off: save lives or save jobs – this is a false dilemma

IMF Blog, April 3, 2020

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At face value there appears to be a trade-off: either save lives or save livelihoods. This is a false dilemma.
Getting the virus under control is a prerequisite to saving livelihoods.
The World Health Organization (WHO) and the International Monetary Fund (IMF) have complementary mandates: the WHO advises on health priorities and protects public health; the IMF advises on economic priorities and helps provide financing.

In the short time since COVID-19 started spreading across the world, the demand for IMF financing has skyrocketed.
Never in the 75 years history of the institution have so many countries – 85 so far – found themselves in need of IMF emergency financing.
The IMF is making financing available in record short time, with the first projects already being approved and money disbursed to provide much needed assistance.
The IMF aims to help by doubling its emergency response capacity from $50 billion up to $100 billion.
Its total lending capacity of $1 trillion is now secured thanks to decisive actions of its membership.
The Fund is increasing its capacity to ease debt service obligations of its poorest members through the Catastrophe Containment Relief Trust for which generous donors are providing grant resources.
Together with the World Bank the IMF is advocating for a standstill of debt service from the poorest countries to official bilateral creditors for as long as the world economy is paralysed by the pandemic.

Health expenditures should be at the top of the priority list when emergency financing reaches countries in need.
Critical health investments listed:
- Paying salaries to doctors and nurses
- Supporting hospitals and emergency rooms
- Establishing make-shift field clinics
- Buying protective gear and essential medical equipment
- Carrying out public awareness campaigns about simple measures like hand washing
Many health systems are unprepared for an onslaught of COVID-19 patients; boosting capacity is paramount.

Support for economy-wide priorities must go together with health spending to:
- Reduce unemployment
- Minimise bankruptcies
- Ensure recovery over time
Targeted economic support measures (in addition to health spending) include:
- Cash transfers
- Wage subsidies and short-time work
- Strengthening unemployment benefits and social safety nets
- Limiting the rise in borrowing costs
Emergency financing can only help if countries strike the balance between health and economic support.

The WHO can help coordinate production and delivery of medical supplies effectively, efficiently, and equitably, for example by facilitating advance purchase agreements.
The WHO is working with suppliers of personal protective equipment for health workers to ensure supply chains are functioning.
Collaboration with other international organisations can be effective—for example, the World Bank’s capacity to aggregate demand to purchase medical supplies in bulk.
The IMF and WHO are cooperating closely with one another, and with other international organisations, to help address countries’ priority needs.

Economic activity is plummeting as infections and measures to combat the pandemic affect workers, firms, and supply chains.
Job losses and uncertainty drag down spending, financial conditions sharply tighten, and the oil price collapse hits commodity exporters — all with cross-border spillovers.
In countries with large informal economies families depend on daily wages to survive.
Highly congested urban slums make social distancing impossible.

Place health expenditures at the top of the priority list when allocating emergency financing.
Ensure targeted support for most-affected households and firms alongside health spending.
Leaders must step up right now for people living in emerging markets.

Op-ed by Kristalina Georgieva and Dr. Tedros Adhanom Ghebreyesus (April 3, 2020).