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)

Afghanistan: then and now

Afghanistan is in the news these days as the Taliban, ousted from power following the US -led invasion in 2001, has returned to power after a surprisingly short-lived, but strikingly successful, military campaign against the incumbent government. Afghanistan’s future is uncertain as the memory of the Taliban’s brutal regime of religious dictatorship between 1996 and 2001 comes back to haunt the international community. There are widely shared fears that the reincarnated Taliban might simply be a recreation of murderous misdeeds of the past driven by religious zealotry.

While reflecting on the future of Afghanistan, it would be worth noting that Afghanistan had a relatively prosperous and peaceful past, especially in the 1950s and 1960s. Indeed, some estimates of long-run per capita GDP suggest that Afghanistan in the 1950s and 1960s was richer than China and South Korea. Decades of conflict have rendered Afghanistan so poor that per capita GDP in 2020 was apparently lower than in 1950 (see Figure below).

Others have compiled a photo montage of Afghanistan of the ‘60s conjuring an era of a modern looking country. As Alan Taylor, writing in the Atlantic, notes wistfully:

In the 1950s and 1960s, some of the biggest strides were made toward a more liberal and westernized lifestyle, while trying to maintain a respect for more conservative factions. Though officially a neutral nation, Afghanistan was courted and influenced by the U.S. and Soviet Union during the Cold War, accepting Soviet machinery and weapons, and U.S. financial aid. This time was a brief, relatively peaceful era, when modern buildings were constructed in Kabul alongside older traditional mud structures, when burqas became optional for a time, and the country appeared to be on a path toward a more open, prosperous society. Progress was halted in the 1970s, as a series of bloody coups, invasions, and civil wars began, continuing to this day, reversing almost all of the steps toward modernization taken in the 50s and 60s.

Picture taken in 1962 at the Faculty of Medicine in Kabul of two Afghan medicine students listening to their professor (at right) as they examine a plaster cast showing a part of a human body. (Source: The Atlantic, July 2, 2013)

A panoramic view showing the old and new buildings in Kabul, in August of 1969. The Kabul River flows through the city, center right. In the background on the hilltop is the mausoleum of late King Mohammad Nadir Shah. (Source: The Atlantic, July 2, 2013)

Contrast the seemingly idyllic pictures shown above with the one below as the Taliban insurgents occupy the Presidential palace in the wake of their triumphant return to Kabul. All we seem to have are armed mullahs projecting their invincibility to the rest of the world.

As one ponders the future of this conflict-ridden country which apparently had a peaceful and reasonably prosperous past, how should one respond to the claims of the US and its allies that Afghanistan in the post-2001 era went through a major phase of progress that is now likely to be reversed?

Was there significant progress? The per capita GDP figures shown above does not support that claim. A broader measure of well-being – the UNDP’s Human Development Index (HDI) – suggest some positive changes between 2000 and 2010 and a tapering off afterwards. Afghanistan has languished in the low human development category (HDI) for decades. Between 2014 and 2019, its international ranking (in terms of HDI) has slipped five places. Today, it is ranked 165th out of 189 countries.

Afghanistan: watch what you say

[Screengrab/Al Jazeera]

The Taliban, who have swept into power by ousting the US and NATO-supported Afghan government led by Ashraf Ghani, in an almost bloodless military campaign that lasted only a short period of time, are apparently fond of saying to foreign powers: ‘you have the watches, we have the time’. They waited 20 years, and now, they are back in power. Only time will tell whether Taliban 2021 will be any better than the brutal regime of 1996. Meanwhile, the US and its allies can only squirm at their optimistic assessments of Afghanistan’s political future. Here is a sample.

“The history of military conflict in Afghanistan [has] been one of initial success, followed by long years of floundering and ultimate failure. We’re not going to repeat that mistake.”

— President George W. Bush, in a speech at the Virginia Military Institute

April 17, 2002

Source: Craig Whitlock, Washington Post, December 9, 2019

“This army and this police force have been very, very effective in combat against the insurgents every single day. And I think that’s an important story to be told across the board.”

— Then-Army Lt. Gen. Mark A. Milley, praising the Afghan security forces during a press briefing from Kabul. Milley is now a four-star general and chairman of the Joint Chiefs of Staff.

September 4, 2013

Source: Craig Whitlock, Washington Post, December 9, 2019

President Biden, in response to a question by a journalist.

Q: Is a Taliban takeover of Afghanistan now inevitable?

THE PRESIDENT:  No, it is not.

Q    Why?

THE PRESIDENT:  Because … the Afghan troops have 300,000 well-equipped — as well-equipped as any army in the world — and an air force against something like 75,000 Taliban.  It is not inevitable.

The U.S. intelligence community concluded last week (in mid-June) that the government of Afghanistan could collapse as soon as six months after the American military withdrawal from the country is completed, according to officials with knowledge of the new assessment.

Source: The Wall Street Journal, June 23, 2021

Boris Johnson, the UK prime minister,  proclaimed: “there is no military path to victory for the Taliban” 

August 07 2021

Source: The Guardian

Happiness and Asian economies

Bhutan, a small, land-locked Asian country, became one of the first, if not the first, in the world to dethrone GDP and enshrine ‘Gross National Happiness’ as a core development goal. It played a pivotal role in the proclamation of UN resolution 66/281 at a meeting of the General Assembly in July 2012. As the UN notes:

The meeting was convened at an initiative of Bhutan, a country which recognized the supremacy of national happiness over national income since the early 1970s and famously adopted the goal of Gross National Happiness over Gross National Product.

The General Assembly of the United Nations in its resolution 66/281 of 12 July 2012 proclaimed 20 March the International Day of Happiness recognizing the relevance of happiness and well-being as universal goals and aspirations in the lives of human beings around the world and the importance of their recognition in public policy objectives.

Measures of happiness, based on so-called ‘life satisfaction’ surveys, usually rely on self-reported conditions of well-being. Hence, measures of happiness are invariably subjective, which is why they are often called measures of ‘subjective well-being’ (SWB).

This does not mean SWBs are unreliable. External validation of survey-based happiness estimates have found them to be reasonably accurate.

SWBs rely heavily on the Gallup surveys of citizens every year in more than 160 countries conducted in more than 140 languages. It is based on the notion of the ‘Cantril ladder’ or life ladder. It is derived from responses to the following question posed in the Gallup survey: “Please imagine a ladder, with steps numbered from 0 at the bottom to 10 at the top. The top of the ladder represents the best possible life for you and the bottom of the ladder represents the worst possible life for you. On which step of the ladder would you say you personally feel you stand at this time?”

The life ladder estimates enable countries to be scored and ranked on a scale of 0 (=worst) to 10 (= best). The country-specific scores and ranks are based on multi-year averages rather than one specific year. Figure 1 displays the 2021 country-specific scores for selected countries in the Asian region (where the scores are derived from 2018-2020 observations). The Asian countries are also compared with the global average for 2021 and the best performer for that year (Finland).

Figure 1

Source: Derived from World Happiness Report, 2021

There are several noteworthy features. Afghanistan is the worst performing country (2.52) not only in the Asian region but in the world at large. In general, the majority of Asian economies (20) in the sample reported here have a life ladder score ranging between 2.52 to 5.48 that place them below the global average (5.61) and far below the best performer (7.84) which is Finland. These estimates suggest that many Asian economies are ‘struggling’ (to use Gallup’s taxonomy) and, in at least two cases, ‘suffering’ (Afghanistan, India).

It is also noteworthy that at least three high income Asian economies – Hong Kong, South Korea and Japan – have scores below Uzbekistan which, according to World Bank classification  is a lower middle-income economy. These high-income Asian economies are the exception rather than the norm, as the top 20 economies in the world in terms of the happiness index reported here are usually high-income countries ranging from Finland (7.84, ranked 1) to Belgium (Belgium 6.83, ranked 20). One notable exception in this ‘top 20’ is Costa Rica which is classified as an upper middle-income country by the World Bank.

Policy makers in Asian economies that are worried about lack of happiness in their societies can draw on statistical exercises undertaken by the authors of the World Happiness Reports. What the statistical analyses show is that  income is only one determinant of life satisfaction that is, in turn, complement by multiple non-income variables. These include: (1) social support (that is a network of friends and relatives that one could draw on in times of personal distress (2) healthy life expectancy at birth (3) freedom to make life choices (4) generosity (share of those who donate to charitable activities (5) perceptions of corruption. The policy lesson is that a narrow focus on economic growth will not necessarily produce a happy society unless they are complemented by a focus on non-income dimensions that affect well-being. This multidimensional approach will acquire greater salience today, given COVID-19.