a strong recovery

To be sure, the COVID-19 vaccines have been a game-changer. Rising vaccination rates boosted herd immunity, creating opportunities to ease restrictions and get the economy started faster. Yet, while multilateral institutions have made efforts to ensure fair global distribution of vaccines, many developing countries still struggle to secure adequate doses for their citizens, while advanced economies deploy vaccines at warp speed. Huh. This is an uneven global recovery and increasing inequality.

Because we are as strong as our weakest link in the fight against the pandemic, global cooperation is imperative. Every country wants to overcome this virus and return to normal life. Therefore multilateral institutions must play a greater role in ensuring that they can all deliver their vaccination programs expeditiously.

We also need to establish an early warning system and improve our crisis preparedness for future pandemics in the form of resources, governance mechanisms, decision-making processes and information sharing. Managing the persistent tension between national sovereignty and global governance will be a significant challenge. As the COVID-19 pandemic has shown, failure to do so will risk further catastrophic damage in the future.

As for the economy, countries are currently in various stages of recovery and are pursuing a variety of post-pandemic strategies, both in terms of policies and timing. But in a highly interconnected world of many different but related financial and economic systems, the easing of incentives in one country will overwhelm others.

In particular, the normalization of monetary policy in developed economies, if not communicated transparently, can increase volatility and potentially lead to volatile capital outflows from emerging markets.

The COVID-19 crisis has put enormous pressure on the public finances of many developing countries, leaving governments grappling with rising debt levels as they try to fight the pandemic. International financial institutions and private creditors should cooperate to ensure an appropriate burden-sharing plan to assist them. While the conformity approach envisaged under the general framework of the G20’s debt service suspension initiative is helpful, this relief is a temporary measure. There is a need for multilateral institutions to provide greater monitoring and guidance to address the growing debt problems of developing economies and mitigate their growing financial woes.

Furthermore, as economic recovery begins to take hold, global supply chains that were disrupted by the pandemic may not immediately adjust to meet the current surge in demand. This problem may be transient, but it is expensive. The pandemic should therefore prompt businesses and policymakers to re-evaluate current global supply chains and resource allocation – a calculation that could generate momentum for emerging markets to achieve a greater share of the global economic recovery.

Meanwhile, energy demand has exceeded its pre-pandemic levels, triggering a global crisis. In addition to the risk that a rise in prices will lead to inflation, the energy crisis also threatens our efforts to combat climate change. Like the fight against pandemics, measures to combat global warming can be successful only if we implement them in a cohesive and coherent manner.

Today, we have the opportunity to combat climate change by revitalizing the economy and promoting green, resilient and inclusive reform at the same time. To achieve this we need to design climate-positive economic policies and provide more sustainable financing. For example, as part of Indonesia’s economic recovery strategy, the government has launched programs to create alternative activities that generate income and preserve forests for local communities.

Green recovery programs are also likely to empower women, who have generally been more disproportionately affected than men by the pandemic and the climate crisis. In many instances, women act as agents of change for sustainable initiatives. As a country with one of the world’s largest areas of rainforest, Indonesia has a strong and clear commitment to implementing green recovery. And in my capacity as co-chair of the Coalition of Finance Ministers for Climate Action, I firmly believe that green initiatives should not be an unfunded mandate.

Indonesia will hold the G20 presidency in 2022 and the Association of Southeast Asian Nations (ASEAN) in 2023. It can therefore help determine the strategic direction of these groups in ensuring a sustainable, resilient and inclusive global recovery. In particular, the G20 members must establish an effective common framework to address the major global challenges of our times, in particular pandemic prevention, sustainable financing and climate change.

None of this will be easy, of course. But, like I said, I’m optimistic. By creating enough political will, I am confident that together, and therefore stronger, we can overcome the COVID-19 crisis. ©2021/Project Syndicate ( www.project-syndicate.org)

Mr. Mulyani Indravati is Indonesia’s Minister of Finance and Co-Chair of the FM’s Coalition for Climate Change.