ILO Working paper 40

Financing human-centred COVID-19 recovery and decisive climate action worldwide: International cooperation’s twenty-first century moment of truth

This Working Paper provides a concrete illustration of how the existing international financial architecture could be activated more fully to mobilize the large sums required to respond decisively to the “great divergence” in COVID-19 crisis recovery between advanced and developing countries as well as to the climate crisis.

All nations have an interest in greatly accelerating implementation – including in low- and lower-middle-income countries – of the strategies that have been agreed internationally to address the universal threats posed by the pandemic and climate change, i.e., WHO’s ACT-A/COVAX initiative; the ILO Global Call to Action for a Human-Centred Recovery from the COVID-19 Crisis; and the 2030 Agenda, which includes the Paris climate agreement and Sustainable Development Goals. The most feasible way these resources can be mobilized at the required scale and speed is for the existing capital and capabilities of the international financial institutions (the IMF and multilateral development banks) to be deployed as imaginatively and expansively over the next several years as advanced countries have deployed their central banks and treasuries since the beginning of the pandemic. The paper outlines a set of specific initiatives to this end, including but not limited to a structured framework for the donation of recently issued Special Drawing Rights (SDRs), that would:

• fully and promptly fund the WHO ACT-A/COVAX Initiative;
• adequately resource debt relief and restructuring, social protection floors and job-rich sustainable infrastructure and industry in these developing countries; and
• finance a global effort to avoid a lock-in of greenhouse gas emissions from coal-fired power generation, which represents the single largest and most time sensitive aspect of the climate action required to achieve the goals of the Paris climate agreement.