COVID-19: UN chief announces Trust Fund for low and middle income countries

United Nations chief Antonio Guterres announced the establishment of a trust fund to support low- and middle-income countries to respond to the emergency and recover from the socio-economic shock from COVID-19 pandemic. The UN Secretary-General announced the new multi-partner Trust Fund for COVID19 Response and Recovery while launching the report, on March 31, on the socio-economic impacts of the pandemic.

Guterres called for a large-scale, coordinated multilateral response amounting to 10 per cent of the GDP but highlighted the limitations of developing countries in doing so. The UN chief said that the developed countries are capable of it on their own but underlined the necessity of massively increasing the resources for developing countries by expanding the capacity of the International Monetary Fund (IMF).

“The United Nations system is fully mobilized, providing guidance for global efforts, supporting country responses and placing our supply chains at the world’s disposal,” said Guterres.

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Call for $2.5 trillion aid package

The establishment of the trust fund came after the United Nations Conference on Trade and Development (UNCTAD) called for an urgent $2.5 trillion aid package to help developing countries avoid worst-case scenarios due to the coronavirus pandemic. The UN trade and development body has predicted a drop of $2 trillion to $3 trillion overseas investment in commodity-rich exporting countries.

“The economic fallout from the shock is ongoing and increasingly difficult to predict, but there are clear indications that things will get much worse for developing economies before they get better,” UNCTAD Secretary-General Mukhisa Kituyi said in a statement.

Read: COVID-19: UN Calls For Urgent $2.5 Trillion Aid Package For Developing Countries

UNCTAD said that the combined effect of COVID-19 pandemic and global recession will be catastrophic for developing countries, impacting the progress towards Sustainable Development Goals. It published a report on March 30 highlighting the economic shock to developing countries due to the health pandemic and advocated for a “whatever it takes” programme.

The $2.5 trillion aid package demanded by the UN agency has been divided into three parts of which $1 trillion should be used to cancel the debts owed by developing countries. Another $1 trillion should be made available through the expanded use of special drawing rights and the rest $500 billion should be used to fund a “Marshall Plan for health recovery” and dispersed as grants.

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(Image credit: AP)