The World Bank Group has been hands on in the response to COVID-19 with one goal in mind: “to build a more resilient and sustainable future.”
The World Bank Group states as its primary concern in poorer economies is to ensure homes and hospitals have power and water, that waste is properly disposed, and food is available and affordable.
“Right now, the goal cannot be to stimulate demand and increase economic activity before the virus is under control,” writes Stéphane Hallegatte and Stephen Hammer for the World Bank Blog. “Instead, we need redistributive actions to smooth the shock.”
The authors write measures “may also be required to maintain access to food, shelter, or other basic needs, ranging from delaying rent or mortgage payments to delivery of school lunches.”
They add: “In many low- and middle-income countries support from multilateral development banks and the IMF will be critical.”
Even after the COVID-19 health crisis fades, “many households will have depleted savings or large debt and will need to save more and consume less.” The authors view stimulus as the solution for a financial and economic recovery.
“Depending on the context, these may include tax cuts and reforms, cash transfers and subsidies, and higher spending in specific sectors or projects,” they write. “These actions will have long-lasting effects on the economic system.”
The authors call for thinking ahead on the part of policymakers, stating that focus on short-term needs should keep longer-term goals in mind. One main goal is the decarbonization of the world economy and the long-term benefits it brings.
“Our choices on stimulus packages will affect our ability to achieve this objective, creating risks but also opportunities,” they write. “For instance, the tax reform component of stimulus packages could create new tax rates for fuel, energy, or carbon, and different incentives to reduce carbon emissions.”
The “unique nature of this crisis” may make the building of a “green infrastructure pipeline” possible. “These could include a big expansion of electric vehicle charging infrastructure, bus and bike lanes, electricity transmission and distribution systems, water and sanitation service coverage, or making neighborhoods more livable and less energy intensive.”
They conclude: “The response to COVID-19 may not only minimize pain and suffering now, but can also build the foundation for a greener, safer, and more prosperous future.”