Aurelia Butler

Yellen and WHO Director-General Tedros Adhanom Ghebreyesus discussed the importance of continuing efforts to vaccinate 70% of the population in all countries this year, and working to strengthen the global architecture to fight pandemics.”They agreed on the urgency of tackling the chronic under-funding of pandemic preparedness before the world’s attention turns elsewhere,” Treasury said in a statement.Nearly 491 million people have been reported to be infected by the novel coronavirus globally and over 6.5 million have died, according to a Reuters tally.Yellen underscored the United States’ commitment to working closely with the WHO, the World Bank and the Group of 20 major economies to develop a financial intermediary fund on pandemic preparedness housed at the World Bank.She and Tedros agreed such a fund would be an important element of the pandemic preparedness architecture.Yellen emphasized the U.S. remains committed to helping countries get more COVID-19 vaccines in arms around the world and to supporting robust, well-coordinated efforts, including with the international financial institutions.She stressed the G20 Finance-Health Task Force should work to bring finance ministers and their health counterparts more closely together to strengthen the global health architecture.Tedros welcomed Yellen’s leadership in pushing for a stronger global response to COVID-19, better longer-term pandemic preparedness and greater health finance collaboration, a source familiar with the meeting said.They also discussed the obstacles to boosting vaccination rates and the need for stronger coordination, as well as clear political, financial, operational and public messaging. More

Yellen, in prepared remarks to the House of Representatives Financial Services Committee for a hearing on Wednesday, said she will ask institutions including the World Bank and the African Development Bank to expand ways to address food security, “including long-term investments in agricultural productivity and agricultural infrastructure.”The international financial institutions, including the International Monetary Fund, will play a critical role in addressing spillovers from the Ukraine conflict that are heightening economic vulnerabilities in many countries battered by the COVID-19 pandemic, she said.”The IMF, World Bank, and EBRD (European Bank for Reconstruction and Development) will be critical partners in rebuilding Ukraine, alongside bilateral donors, and they also will provide vital support to neighboring countries welcoming refugees,” Yellen said.The IMF has provided $1.4 billion in rapid financing for Ukraine, while the World Bank has provided $490 million in rapid financing for Ukraine, part of a $3 billion package of support planned in coming months. The EBRD has proved an initial 2 billion-euro package for Ukraine.Yellen said this assistance has given Ukraine fiscal space to pay salaries for soldiers, doctors, nurses and civilian government employees while meeting its external debt obligation.”These are admirable acts of credibility by a government under siege,” she said.Yellen added that the multilateral development banks should promote energy efficiency and capital investments to help governments diversify away from fossil-fuel-based energy sources including Russia.She said the Biden administration was seeking congressional authorization to provide financing to bolster IMF lending facilities for poor and vulnerable countries — the Poverty Reduction and Growth Trust and the new IMF Resilience and Sustainability Trust. More

Governments across the world have ramped up borrowing since the COVID-19 pandemic erupted two years ago, as they tried to shield their economies from the fallout. That took global government debt to a record $65.4 trillion in 2021, compared to $52.2 trillion in January 2020, Janus Henderson said. China’s debt rose the fastest and by the most in cash terms, up a fifth or by $650 billion last year, it added. Among large, developed economies, Germany saw the biggest increase in percentage terms, with its debt rising by 15%, almost twice the average global pace.According to Janus Henderson, government debt has tripled in the past two decades but a mitigating factor was low debt servicing costs.With the effective interest rate on all the world’s government debt slipping to 1.6% last year from 1.8% in 2020, debt servicing costs fell to $1.01 trillion.And a strong global economic recovery meant the global debt-to-GDP ratio improved to 80.7% in 2021 from 87.5% in 2020, the report added. Now though, debt costs may rise sharply, the asset management firm forecast, estimating the global interest burden to increase by almost 15% on a constant-currency basis to $1.16 trillion in 2022. “The biggest impact is set to be felt in the UK thanks to rising interest rates, the impact of higher inflation on the large amount of UK index-linked debt, and the cost of unwinding the quantitative easing (QE) programme,” the report said. “As interest rates rise, there is a significant fiscal cost associated with unwinding QE. Central banks will crystallize losses on their bond holdings which have to be paid for by taxpayers.”The Bank of England has raised interest rates three times since December to 0.75%. Financial markets price in rates hitting 2% by the end of this year.With inflation jumping and investors anticipating higher rates from major central banks, sovereign bond yields too have risen sharply. U.S. 10-year Treasury yields, for instance, are up almost 100 basis points this year to 2.45%. The Janus Henderson report said global government bond markets delivered a -1.9% total return in 2021, only the fourth time in 35 years to see a decline. More