IMF says investments in vaccines 'pay for themselves'

Fund economists calculated that controlling the pandemic sooner than expected means "stronger economic growth"

A nurse prepares a dose of the Pfizer-BioNTech vaccine against the Covid-19 at Begin military hospital in Saint-Mande, east of Paris. Credit: AFP.

Public spending aimed at accelerating Covid-19 vaccination campaigns and ending the pandemic will generate returns and boost economic growth, the IMF said on Wednesday.

"Vaccination will, thus, more than pay for itself, providing excellent value for public money invested in ramping up global vaccine production and distribution," the IMF said in its Fiscal Monitor report.

Fund economists calculated that controlling the pandemic sooner than expected -- meaning most countries have broad and affordable access to vaccines by early 2022 -- means "stronger economic growth" and more than $1 trillion in cumulative tax revenues for advanced economies by 2025.

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In the latest forecasts released at the start of the spring meetings held alongside the World Bank, the IMF was more optimistic about global growth this year, projecting a 6.0 per cent expansion after the 3.3 contraction in 2020 -- the worst peacetime downturn in a century.

The IMF pointed to the rapid responses by governments to spend freely -- a response totaling $16 trillion -- to help contain the economic damage from the pandemic, but warned that ending the health crisis remains crucial to a solid recovery and vaccine distribution to poor countries was "deeply iniquitous."

Read | Inequality most apparent in direct effects of Covid-19, says World Bank president

The Fiscal Monitor stresses the need for continued government spending, but notes that rising debt levels make it critical for policymakers to target their aid.

It also repeats the suggestion that countries use taxes on the rich to finance their programs.

"To help meet pandemic-related financing needs, policymakers could consider a temporary Covid-19 recovery contribution, levied on high incomes or wealth," the report said.

The IMF also noted that "domestic and international tax reforms are necessary" to generate "the resources needed to improve access to basic services" as well as bolster safety nets and development goals.

IMF chief economist Gita Gopinath on Tuesday already noted the fund's longstanding support for the idea of a universal tax that would reduce the ability of companies to shift their profits to tax havens.

"We are very much in favor of a global minimum corporate tax," she said.