G-20 meet: FM Sitharaman calls for mechanism to be ready for pandemics

Need methodologies to adapt to new ways of funding, says Sitharaman

Union Finance Minister Nirmala Sitharaman on Thursday pitched for an independent governance mechanism at the multilateral level for distribution of funds and vaccines through greater mobilisation of funds, to remain prepared for future pandemics.

Speaking at a virtual seminar on “Strengthening Global Health Architecture” on the sidelines of the G20 finance ministers and central bank governors meeting organised by the host country, Indonesia, Sitharaman said efforts should be to maximise available resources within the country, committing for today’s pandemic as well as investing for future preparedness. “We need to have an independent governance mechanism even if they are located in multilateral institutions and keep principles of inclusivity, transparency and equity in mind. Increased funding will be needed from multilateral development banks. Resilient and Sustainability Trust (RST) being created by the IMF must keep pandemic preparedness in mind,” she added.  

The proposed $50-billion RST’s central objective is to provide affordable long-term financing to support countries as they tackle structural challenges.

Sitharaman said the lesson to be learnt from the coronavirus pandemic is the lack of adequate preparedness of countries.

“Amounts which we could spend were also not adequate and therefore although all of us had our hearts in the right place, our hands were tied because we weren’t effectively ready for such a crisis. All of us have to contribute towards global public good,” she said.

India spent $29 billion on health infrastructure mission in which health insurance was assured for the poor and for low income groups, the finance minister said.

Sitharaman said prices of mobilising resources were acute in low- and middle-income countries. “Their own fiscal space to generate that kind of increase in funding health-related and climate issue-related matters is very limited,” she added.

Sitharaman said official funds from development assistance (ODA), multilateral funding should be treated as catalyst funds to generate from private philanthropy and markets. “By bringing in multilateral funding and also making sure that countries can come up with grants that can be given to small- and low-income nations, we have to evolve methodologies through which we can adapt new ways of funding to fill those gaps which exist between multilateral institutions,” she added.

The finance minister also said the World Health Organisation (WHO) needs to expand its capacity and mobilise global resources, and structural bottlenecks will have to be addressed to bring down the impact a future pandemic might have.

During the first session of the two-day summit, Sitharaman talked about global economic outlook and risks, including inflation, supply disruptions and new variants of the virus and called for expeditious and equitable distribution of vaccines to aid recovery. “FM Smt. @sitharaman shared insights on India’s policy response and suggested that recovery measures have to be built around a long-term vision. She emphasized on addressing structural bottlenecks to reduce the pandemic’s scarring effects and build resilience. FM Smt. @nsitharaman stated that it is crucial to address the gaps in global #pandemic #preparedness and said that the work of #G20 Joint Finance and Health Task Force should progress in this direction,” the finance ministry said in a series of tweets.

Separately, in a G20 surveillance note, the IMF said since the January 2022 WEO update projected growth of 4.4 this year, with economic indicators pointing to continued weak growth momentum amid the spread of the virus. “Supply-demand mismatches, increases in energy and food prices, and bottlenecks in transportation of goods have put upward pressure on inflation — which in some economies has broadened across consumption categories, prompting a shift toward a less accommodative monetary policy stance. While economic activity is projected to return to pre-pandemic trends in many advanced economies, many emerging market and low-income economies continue to face significant headwinds. The most vulnerable people continue to struggle, with employment yet to fully recover and the danger of persistent learning losses from school closures,” it added.