Aurelia Butler

CHICAGO (Reuters) – Four organizations focused on global health and the economy say it will take $15 billion in grants this year, and another $10 billion annually after that to establish and maintain an adequate toolkit to respond to COVID-19 and address future pandemic threats.The estimate is laid out in “A Global Strategy to Manage the Long-term Risks of COVID-19,” a working paper published on Tuesday by the International Monetary Fund, in partnership with the Coalition for Epidemic Preparedness Innovations (CEPI), the Global Fund, and Wellcome Trust.In the paper, the four global groups assert that ending the pandemic everywhere remains an urgent economic, health, and moral priority for the world.”Given the many possible scenarios for the evolution of COVID-19 (from benign to severe) and given the limited resources countries have, we need a new strategy,” Gita Gopinath, the IMF’s First Deputy Managing Director, said in a statement.The IMF estimated the pandemic resulted in $13.8 trillion in cumulative losses as of January 2022.Gopinath said countries need vaccines, tests, treatments and an improved health infrastructure to tackle COVID-19 and other deadly diseases.”These last two years have shown that remarkable progress is possible when the world comes together and supports science boldly at scale, across borders,” said Jeremy Farrar, director at the Wellcome Trust charity. “Now is not the time to ease up – the virus’s next move is anything but certain and the risk of new variants high.” Richard Hatchett, chief executive of CEPI, said vaccines are a key part of the response.”They are one of our most potent tools against pandemic risks and will be critical to any future response,” Hatchett said in a statement. But they must be accompanied by investments in global surveillance, research & development, manufacturing and health systems, he said. More

The paper, prepared with the Coalition for Epidemic Preparedness Innovations (CEPI), the Global Fund, and charitable group Wellcome, said a new, more comprehensive approach was needed immediately to strengthen global health systems and limit the already staggering $13.8 trillion cost of the pandemic.”The cost of inaction – for all of us – is very high. We need to act – now,” IMF First Deputy Managing Director Gita Gopinath said in a statement. More

Despite an economic recovery, borrowing will stay elevated because of high debt rollover requirements and war in Ukraine, the ratings agency said in an annual note.While 137 countries will borrow an equivalent of $10.4 trillion in 2022, an estimated 30% lower than 2020, the overall figure is one-third higher than average borrowing between 2016 and 2019, S&P said.”Tightening monetary conditions will push up government funding costs,” S&P analysts said. “This will pose additional difficulties to sovereigns that have been unable to restart growth, reduce reliance on foreign currency financing, and where interest bills are already critically high on average.”Borrowing in the economies of emerging Europe, Middle East and Africa (EMEA) will rise $253 billion to the equivalent of $3.4 trillion by the end of the year, S&P said in an accompanying report on Thursday.Egypt, which has recently sought IMF assistance, is set to overtake Turkey as the region’s largest issuer of sovereign debt, with $73 billion worth of bond sales, S&P analysts forecast.Among larger countries globally, Kenya, Egypt and Japan have the biggest share of debt that needs to be rolled over this year, the analysts said, pointing to short-term debt of 26% and 30% of total debt stocks in Egypt and Kenya respectively.Commercial debt in EMEA emerging markets is set to increase to 37% of GDP from 31% in 2016, boosted by pandemic-related costs, a rise in commercial borrowing in Oman and Saudi Arabia and “persistently high fiscal deficits” in Egypt and Romania.Across emerging markets, JPMorgan (NYSE:JPM) analysts said in a note on Monday, the corporate default rate could reach 8.5% this year, more than double the 3.9% they expected before Russia invaded Ukraine and the highest since the global financial crisis. More

OTTAWA (Reuters) -Canada’s Liberals find themselves in a bind ahead of this week’s budget: the economy has recovered from the pandemic, yet Prime Minister Justin Trudeau has pledged billions in new stimulus, a political poker chip that could further torch runaway inflation.Trudeau’s Liberals will present their 2022 budget on Thursday, just seven months after promising C$78 billion ($62.7 billion) in new spending in a re-election campaign. Much of that, to be spread over five years, has not yet been budgeted.But fresh fiscal spending could be risky at a time when inflation is already running at a 30-year high. If too broad, measures could fuel further price increases and end up hurting lower-income Canadians.”When you look at the impact of this elevated inflation on lower-income households, clearly they are hurting,” said Rebekah Young, director of fiscal & provincial economics at Scotiabank.”But at the same time, from an economic perspective, there’s a risk that if you put even more money at the problem, it can create more pressures.”Young said major new spending initiatives should be set aside for the near term, even though total government revenues are expected to be higher than previously forecast due to higher inflation-linked tax revenue.But that may be easier said than done. The government has already committed to spend more on defense following Russia’s invasion of Ukraine. Trudeau’s Liberals currently spend less than 1.4% of GDP on defence, under the NATO threshold of 2%.The budget will also include about C$2 billion on a strategy to accelerate Canada’s production and processing of critical minerals needed for the electric vehicle supply chain, Reuters reported exclusively on Monday.Green technologies and initiatives on housing will be focal points of the budget, said one senior source.And the Liberals will have to start to deliver a national dental-care program for low-income Canadians – a costly initiative that is a cornerstone of a support deal with the New Democrats meant to keep Trudeau in power until 2025.Structural spending will end up adding to the deficit once the stronger than expected revenues are no longer rolling in.This could derail efforts to reduce Canada’s debt-to-GDP ratio, which skyrocketed during the pandemic amid extraordinary emergency spending and was last forecast to peak at 48.0% this year.”Any near-term drop in the federal deficit from today’s improved economic outlook could be fleeting. As such, we feel the risks to our baseline debt-to-GDP forecast are very much skewed to the upside,” said Randall Bartlett, senior director of Canadian economics at Desjardins. Rising interest rates – the Bank of Canada is widely expected to hike its policy rate by 50 basis points to 1% at a decision on April 13 – will add to debt pressures. Canada’s federal debt was last forecast to top C$1.19 trillion this year. Trudeau, facing backlash over surging home prices and rents, has also promised to make housing more affordable, including measures to make it easier for first-time buyers to get into the market. “That does get us into a problem where typically the prices just adjust to reflect the improvement in affordability,” said Stephen Brown, senior Canada economist at Capital Economics.($1 = 1.2449 Canadian dollars) More

MADRID (Reuters) – Spain’s central bank on Tuesday lowered its economic growth forecast for this year and next due to the impact of inflation stoked by Russia’s invasion of Ukraine, and said the pace of recovery had already slowed down in the first quarter.Inflation is projected to rise to 7.5% in 2022.The Bank of Spain now expects gross domestic product to expand 4.5% in 2022, down from its December estimate of 5.4%. Growth is then expected to slow to 2.9% in 2023, also less than the previously predicted 3.9%.”The conflict in Ukraine and the economic sanctions imposed on Russia are expected to have a severe impact on growth prospects for the coming quarters,” it said in a report.It said it did not expect Spain to reach pre-pandemic output levels before the third quarter of 2023.Last year, the Spanish economy rebounded 5.1% after a record 10.8% slump in 2020 induced by the coronavirus pandemic.The government has yet to revise its bullish 7% growth projection for 2022 made last year. Economy Minister Nadia Calvino said the Ukraine conflict would weigh on growth, but recovery should continue.The central bank put first-quarter GDP growth at 0.9% from the previous three-month period, when the expansion was 2.2%, and expects European Union-harmonised consumer inflation to have clocked 7.9% in the first quarter.”The impact of the conflict will be concentrated in the second quarter under our central scenario which does not encompass an escalation,” said Bank of Spain Chief Economist Angel Gavilan. He expected the economy to still eke out small growth in the second quarter but did not rule out a contraction.Gavilan saw inflation, which hit 9.8% in March year-on-year, hovering around 10% until the summer, when it should start abating. For all of 2022, Gavilan said, inflation should reach 7.5%, double the bank’s previous forecast of 3.7%, before gradually dropping to 1.6% by 2024.Soaring energy prices have already caused transport strikes and stoppages in some sectors in Spain, aggravating supply chain disruptions and inflation.Public debt is expected to fall to 112.6% of GDP in 2022 from 118.4% last year. More