(Agence Ecofin) – Faced with covid-19, the spending of the world’s governments had already reached $ 12 trillion at the end of September 2020. However, a significant part of these resources (95%) was used to manage the health of the markets financial, rather than that of men.
As of September 11, 2020, only 5.2% of the budgetary commitments of the States of the world in the face of covid-19 have been put at the service of the health response, we learn from the update of the global budget monitoring report published on the 26th. January 2021 by the International Monetary Fund (IMF).
Of the 11,740 billion budget commitments against the pandemic as of September 11, 2020, only $ 611 billion had been earmarked for health, noted theEcofin Agency by browsing the document.
$ 5,265 billion has been allocated for non-public health spending and about $ 4 trillion in guarantees have been made for loans to businesses. Saving the economy has therefore been at the heart of the budgetary strategies of the States of the world.
The IMF in its update of the report on financial stability in the world published in January 2021 recalls this option taken by public budgets for financial markets. Its analysts estimate that “The recovery of the markets and the economic recovery remain dependent on the continued support of monetary and budgetary policies”, if ever the anti-covid-19 vaccination programs were not properly carried out.
In a way, the big winners from the pandemic situation have been the world’s investment banks. The issuance of stocks and bonds by companies, governments and institutions for financing has reached levels not recorded for many years, according to Refinitiv, the data platform of Reuters.
In 2021, the priorities do not seem to have changed. If covid-19 remains the main problem of the global economy, we do not see many budgetary commitments to, for example, make the vaccine accessible to the whole planet. However, in developed economies in particular, we are ready to provide unlimited support for anything that could reassure the financial markets as well as the capital markets (loans).
This view of things also finds a favorable echo within the IMF. “Leaders must continue to provide support until a sustainable recovery is firmly in place: insufficient support risks jeopardizing the reconstruction of the global economy,” can we read in his report on financial stability of January. This perspective is not without risks.
Rises in investor expectations, particularly in the equity market, have been stronger than the outlook for the real economy. Decisions seem to be made to make short-term margin.
This puts pressure on governments and flexibly conditions the way they allocate resources as part of the response to covid-19.
Idriss Linen
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