Role of International Financial Institutions in Pandemic Treaty

The COVID-19 pandemic has pushed the global economy into a multisectoral crisis. The situation demanded that nation states respond swiftly by formulating funding mechanisms. However, most economies lacked adequate funds for the pandemic response, which led to the international financial institutions’ involvement in the response and recovery operations. This article delves into the various measures taken by the IFIs during the pandemic by inspecting them through a theoretical lens of liberal institutionalism, which emphasises collective and coordinated action.

The world has witnessed an unprecedented health crisis since March 2020 due to the COVID-19 pandemic. It has had a multisectoral impact on the global economy, with a significant slump in revenue generation, trade curbs, and the cost of handling the health emergency (OECD 2020). The developed and developing countries are facing a rise in public debt and a potential recession that could disproportionately impact low- and middle-income countries (Kose et al 2022). This volatile and uncertain situation has forced governments to reimagine their financial preparedness and management of the health sector.

The health crisis has shown that macroeconomic stability and debt transparency are critical factors in enhancing one’s ability to use resources and request external help strategically. During such economic turmoil, international financial institutions (IFIs) such as the International Monetary Fund (IMF) and World Bank had to step up their efforts to rebuild the global economy. The role of IFIs’ becomes crucial in tackling the economic crisis as they can mobilise technical support for better coordination of planning a response and guide national governments in managing fiscal and monetary policies.