Vaccine inequality, SDGs and the new allocation of Special Drawing Rights (SDRs) by the IMF: promises and pitfalls

Map of vaccine inequality

It widely known that the challenge of vaccine inequality (see Map above) impedes the ability of emerging and developing economies (EDEs) to cope with the pandemic and thus resume normal economic activity. As of today (September 15, 2021), 60.8% of the population in high income countries had at least one dose of available vaccines, while only a little over 3% of the population in low-income countries had one dose. It would take a massive – and unaffordable  – increase of 57% of health-care spending for low-income countries to inoculate 70% of the population against COVID-19. In contrast, advanced economies will only need to increase 0.8% of health-care spending to reach the same target.[1]

Given this grim challenge, the IMF  – in conjunction with other international agencies – has recently (June, 2021) proposed the provision of a USD 50 billion plan to vaccinate at least 60% of the world’s population and complement the global vaccination program with relevant COVID-safe health measures. No concrete actions have been taken so far.

The announcement by the IMF of the largest allocation of special drawing rights (SDRs) amounting to USD 650 billion in August, 2021 might be one way to support the USD 50 billion-dollar plan. Yet, critics are concerned that the new SDRs might raise a lot of expectations without fulfilling them. This is because SDRs – in line with line with long-standing practice – will be distributed to countries in line with a country’s quota share with the IMF. Given that EDEs are ‘minority’ shareholders, it is not surprising that EDEs as a whole are expected to get 42% of SDRs, while low-income countries are likely to get 3.2% of the new SDRs.[2] In some cases, even this modest amount might be a lot as a share of the GDP of low-income countries, but this might still fall short of their spending needs. On the other hand, advanced economies that do not really seem to have financial constraints in dealing with the pandemic, will have significant shares of SDRs which they might not be prepared to recycle to the poorer parts of the world. Hence, a proposal has been made that a COVID-19 trust be set up to recycle the SDRs as well as transfer them to the regional development banks (Eichengreen, 2021). Whether this will happen remains to be seen.

There is the long-term development challenge of attaining and financing the SDGs. Even in the pre-COVID-era, there was a USD 2.5 trillion financing gap which, as a result of COVID-19, has increased to USD 4.2 trillion (OECD, 2021). This has occurred against a background of modest trends in national tax revenues of EDEs as well as aggregate trends in external finance – see Figure 1 below. Hence, as the international community approaches 2030, the key fiscal policy will revolve around finding sustainable means of resource mobilization to reduce the SDG financing gap.

Figure 1

[1] These statistics are available at

[2] These figures are based on data provided by the IMF  (

India’s GDP: don’t be fooled by the numbers

The Indian economy apparently grew by an astonishing 20 percent in the most recent quarter for which data is available (Q1, 2021-22). In a tweet, the Ministry of Finance proclaimed:

Q1:2021-22 data reaffirms Government’s prediction of an imminent V-shaped recovery made last year at this time. Increase of 20.1% in GDP – despite the intense second wave (of COVID-19) in the months of April-May – highlights the continued economic recovery.

[Extract of a tweet the  from Ministry of Finance, ]

This was accompanied by the following figure.

Figure 1

Really? Despite the savage impact of the second COVID-19 wave that killed hundreds of thousands within the space of a short period and decimated small business? This should provoke one to invoke  the old adage ‘lies, damn lies, and statistics’. It is always possible to use numbers to bolster a weak argument.

Consider the following admittedly contrived example. Take three periods (each representing a quarter). Set period 1 as 100. Now assume there is a massive economic contraction so that the level of GDP in the second period is 75. Assume that a ‘V-shaped’ recovery takes place so that the GDP level in period 3 is 90. One could argue that this is not yet a ‘real’ recovery because the level of GDP in period 3 is still below period 1.

This contrived example offers a good representation of what happened to the Indian economy. Today, (2021-22) Indian GDP is lower than it was in 2018-19 – see Table 1 below.  Hence, celebrating a 20 percent quarterly growth rate conceals more than it reveals.

Mahesh Vyas, who heads the highly cited Centre for Monitoring the Indian Economy (CMIE), aptly observes:

India can … choose to celebrate the rapid recovery from the excruciating pain of lockdowns or bemoan the steady erosion of well-being and growth potential…it is now becoming increasingly clear that the recovery … will not get India’s real GDP to where it was before the shock even by the end of March 2022. 

Table 1

Source: which in turn is extracted from other media reports (Hindustan Times, Indian Express)