0158 GMT October 23, 2019
A new Pandemic Emergency Financing Facility was the main outcome of a quiet Group of Seven finance ministers summit in Sendai, Japan, with the hosts pledging an initial $50 million over three years to fund the system, FT reported.
The PEF addresses a massive failure to provide timely aid during the Ebola outbreak of 2014, giving the disease time to spread across West Africa, at an eventual cost of $10 billion and more than 11,300 lives.
It will help reduce the risk that even more dangerous new diseases, such as a mutated influenza virus, can sweep the world before scientists have time to find a vaccine.
“For the first time we will have a system that can move funding and teams of experts to the sites of outbreaks before they spin out of control,” said Jim Yong Kim, president of the World Bank. “Pandemics pose some of the biggest threats in the world to peoples’ lives and to economies.”
The PEF will buy coverage from reinsurance companies. It will also use World Bank-issued pandemic catastrophe or ‘cat’ bonds. Such bonds pay a higher coupon but investors lose some income or capital if the catastrophe in question occurs.
It is designed automatically to pay out funds to affected countries and health agencies when the number of infected people, the number of fatalities, the number of infected countries and the growth trend of an outbreak meets certain thresholds, using publicly available data.
The World Bank estimates that if the PEF had existed in mid-2014 it would have provided an initial $100 million as early as July to fight the epidemic. In reality, money did not flow on a large scale until three months later, during which time the epidemic had increased tenfold in size.
“Recent years have seen a dramatic resurgence of the threat from emerging and re-emerging infectious diseases,” said Margaret Chan, director-general of the World Health Organization, which helped to design the payout trigger and would be one potential recipient of the funds.
The G7 finance ministers issued no communique, although several finance ministers sad the global economic outlook was healthier than when the G20 met in Shanghai in February. Japan is keen to keep the focus on next week’s summit of leaders in Ise-Shima, central Japan.
“We as the G7 believe the biggest economic problem is demand,” said Taro Aso, the Japanese finance minister. “Demand, there is no demand, and that is the biggest problem around the world.” Prime Minister Shinzo Abe wants next week’s summit to call for greater use of fiscal policy to boost growth, although Germany is strongly opposed.
A number of finance ministers warned of the negative effects of ‘Brexit’, although Aso had to roll back a gaffe after he told reporters that some finance ministers though Brexit would be good. Aso’s staff said he misspoke and meant to say that Britain staying in the European Union would be good.
According to people present at one of the private sessions, UK Chancellor of the Exchequer George Osborne urged his fellow ministers to speak out if they opposed Brexit, adding jokingly that if they support it they should keep quiet.