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The Covid-19 pandemic is one of the deadliest emergencies in modern history, with an excess global death toll of 14.9 million (and still rising). It has pushed an estimated 100 million people into poverty and set back progress toward the 2030 Sustainable Development Goals, not least SDG3: health and well-being for all.

Despite the pandemic’s massive costs, the G20 and international financial institutions still have not created a pandemic preparedness and response framework capable of managing the next global health crisis. In many countries, health spending is being slashed (or kept at an insufficient level) as International Monetary Fund-driven austerity comes back into fashion. By next year, 85% of the world’s population will be suffering the effects of reduced investments in public services and public-sector capacity.

Just two and a half years after the start of the pandemic, health is again being framed as a short-term discretionary expenditure rather than as a long-term investment that is central to economic well-being and resilience. As world leaders have shifted their focus to issues such as inflation and food insecurity, they have forgotten that today’s economic and financial crises are by-products of a still-unresolved global health emergency.

Covid-19 is killing 10,000 people a week on average, and uneven vaccination rates have created the conditions for a “variant soup” that makes it more difficult to predict and respond to new waves and the next devastating mutation. Covid-19 outbreaks continue to disrupt manufacturing, travel and access to treatment for other infectious diseases. We have yet to stamp out a pandemic that is undermining decades of progress, let alone equip ourselves for when the next outbreak inevitably occurs.

A small investment

The World Bank and the World Health Organization estimate that avoiding another tragedy such as Covid-19 can be achieved with an investment in preparedness of just $1.30 per person. This year, the international community established a multilateral financial intermediary fund to help close the $10.5bn annual preparedness financing gap. Yet that fund has generated only about $1.5bn so far. Similarly, in October, the IMF launched a Resilience and Sustainability Trust to help low- and middle-income countries finance urgent health (and climate) needs. Yet these funds come with the IMF ’s usual conditions regarding fiscal consolidation, which could ultimately undermine the health systems that they are supposed to be strengthening.

These examples are indicative of a larger problem. As the WHO Council on the Economics of Health For All has argued, G20 countries and the international community are still clinging to an outdated “donor-beneficiary” mindset, viewing preparedness as a charitable development project rather than as a global common good that is in their own interests.

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To be sure, the pandemic, rising debt burdens, climate change, inflation, food insecurity, tightening monetary and financial conditions and other global problems have severely constrained most low- and middle-income countries’ fiscal space. But neither the Bretton Woods institutions nor G20 governments have risen to the challenge of addressing this problem, leaving in place massive barriers to health-related investments just when countries need them most.

Meeting the world’s preparedness financing needs will require a more holistic, bottom-up approach, with poorer countries creatively leveraging development finance, capital markets, domestic resources and debt-restructuring tools to create the fiscal space they need to invest in health.

Some countries are already showing what this looks like. In Barbados, Prime Minister Mia Mottley’s government recently negotiated the inclusion of a new “pandemic clause” in its sovereign bonds, in line with recommendations from the emerging Bridgetown Agenda. Were the WHO to declare another pandemic affecting the region, the clause would defer interest payments, potentially for several years, without impinging on the country’s credit rating.

To put this in perspective, low- and middle-income countries paid $108.2bn to service their debts in 2020, whereas the Covid-19 ACT-Accelerator programme to help those countries received just $23bn in funding for the 2021-22 fiscal year. By immediately and temporarily reducing these governments’ debt burdens in the face of future health emergencies, pandemic clauses would provide the short-term budget flexibility countries need.

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As interest rates rise amid a dimming global economic outlook, the IMF warns that more than 60% of low-income countries and more than 25% of emerging markets are already in, or at risk of, debt distress. But countries can also use debt-restructuring processes to meet their preparedness needs, such as through debt-health swaps, whereby debt relief is conditioned on investment in public health.

The Global Fund has already tried this approach on a smaller scale, and it could be scaled up along the lines of Belize’s successful debt-for-nature swap. The IMF has promised to create a model for debt-for-nature swaps; it should publicly commit to do the same for health and preparedness financing.

A global wealth tax

The remaining elephant in the room is international tax governance. A global wealth tax could generate the funds needed to tackle preparedness financing shortfalls but no country or multilateral organisation has backed such a proposal. Financing for global public goods such as pandemic preparedness and climate mitigation must be put at the centre of ongoing conversations about a potential global wealth or financial transactions tax, and in the implementation of the OECD’s new minimum corporate tax framework. While the tax deal primarily benefits G7 countries, it could easily be tweaked to redistribute more under-collected tax revenue to low and middle income countries.

There is no silver bullet for preparedness financing. The fight to ensure that national health systems and global public health institutions are better prepared to confront future pandemics will require a “portfolio approach”, with countries cobbling together the necessary investment from a range of sources. With high-income countries still hoarding vaccines and coming up short at global donor events, we should look to low- and middle-income countries for inspiration and guidance on how to generate the fiscal space required to achieve health for all.

From Project Syndicate