RESOLUTION LFC 311

FORUM: LEGAL & FINANCE COMMITTEE

QUESTION OF: Proactively putting methods in place in the anticipation of state debt following the COVID-19 crisis

SUBMITTED BY: Poland

CO-SUBMITTERS:Argentina.

STATUSRejected

THE LEGAL AND FINANCE COMMITTEE,

 

Aware of the worldwide economic crisis as a result of the pandemic outbreak evidenced by the expected contraction of 5.2% in global Gross Domestic Product (GDP), 

Alarmed by the negative impact of the financial constraints on the execution of development frameworks, namely the Sustainable Development Goals(SDG) and others, 

Recognizing the effort of the International Monetary Fund (IMF), the World Bank Group, and G20 member states in creating the Debt Service Suspension Initiative (DSSI) that temporarily relieved the debt burden of developing countries in times of crisis, 

Keeping in mind that the most successful measure against COVID-19 remains at home, but this has also been seen to financially strain both people and governments,

Bearing in mind that  although the amounts will vary dramatically, it is an absolute fact that every United Nations (UN) member state is in debt. Before the COVID-19 crisis, this was the case and would most certainly proceed in the same manner before and afterwards,

 

  1.  Suggests that the federal government of each member state  adopts domestic policies in order for the nations to cope with the COVID-19 pandemic and recover a certain amount of capital by ways such as but not limited to:
    1. government to implement subsidies in the form of household vouchers for the purpose of stimulating local demand and consumer confidence
    2. strengthening or establishing fiscal policies such as but not limited to: 
      1. Enhance the existing automatic stabilizers in the context of personal income tax and welfare system
      2. Conduct necessary fiscal stimulus such as but not limited to temporary tax cuts
    3. further implement monetary policies, namely interest rate lowering;
  2. Calls upon all the related Member States that have been working on the formulation of COVID-19 vaccination, medication or drug to convene in a country with low fatality rate and well-equipped laboratories to collaborate and merge their formula in cooperation with the World Health Organization (WHO) and World Medical Association (WMA) in order to:
    1. consolidate and unite the separately found medicines and pharmaceutical solutions
    2. accelerate the process of coming up with a viable solution in quest of:
      1. herd immunity by spreading the vaccine worldwide
      2. decelerating the mortality rate and the spread of the contagious virus
      3. preventing the pandemic from turning into an aggravated catastrophe
      4. forming an indispensable component of health systems in the prevention, diagnosis and treatment of the coronavirus pandemic and in alleviating disability and functional deficiency;
  3. Requests the creation of an emergency fund in order to provide necessary economic support to the countries that have been losing their cash flow due to COVID-19 that will be funded and supervised by the IMF which will:
    1. help countries that are struggling to cope with the economic consequences of coronavirus avoid bankruptcy for at least a couple of months
    2. aid scientists to obtain necessary equipment and substances to devise a vaccine for combating the coronavirus by providing them monthly loans and postponing the interest payment deadlines of those loans;
  4. Suggest the possible step towards a digital economy that can serve as an alternative pathway for economic growth and further resolve the issue of state debt in long-term prospective byways such as but not limited to:
    1. enhance the universal access to the internet and the accessibility of relevant infrastructure 
    2. develop e-government applications aiming to foster the efficiency of public service in fields such as but not limited to: 
      1. education
      2. health service, disease control information, and remote diagnosis 
    3. encourage the development of digital entrepreneurship by ways such as but not limited to:
      1. emphasizing the benefits of a digitized business, in which the accessibility of such jobs was unaffected despite the lockdown  
      2. suggest the government implement training programs that prepared individuals for launching online start-ups and the relevant digital skills needed
      3. enact domestic policies that favor the development of start-ups such as but not limited to zero-interest loans;
  5. Strongly urges special support for developing countries’ sustainable development program, especially those under funds contractions due to the pandemic, byways such as but not limited to:
    1. suggest the extension of the Debt Service Suspension Initiative (DSSI) in order to relieve the financial burden of developing countries with measures such as:
      1. the extended date of payment will be evaluated in a case-by-case manner by the World Bank Group based on each country’s Debt Sustainability Analysis(DSA) 
      2. taking into account the needs of Highly Indebted Poor Countries(HIPCs) in addition to member states with a low Human Development Index(HDI)
    2. emphasize the cooperation between member states and non-governmental organizations (NGOs) and inter-governmental organizations(IGOs) to sustain the development progress in less economically developed countries including ways such as but not limited to: 
      1. urges the United Nation Development Programme (UNDP) to submit a quarterly report to this committee outlining individual country’s most urgent humanitarian issues under the pandemic that required financial resources so that limited funds can be allocated more effectively
      2. strongly encourages developing countries to cooperate and receive assistance from international monetary institutions, such as but not limited to the Debt Management Facility(DMF) by the World Bank Group or the Extended Credit Facility (ECF) by the International Monetary Fund;
  6. Further recommends the governments supporting businesses and its employees which are unable to have an economic gain during lockdown with a financial aid which will:
    1. encourage those businesses to go into lockdown which is a necessary practice in the ongoing COVID-19 pandemic by shifting the focus of the current UN programs
    2. support the employees of  local businesses financially by:
      1. collaborating with relevant  UN bodies and International Labor Organization (ILO) to come up with employee benefit schemes
      2. transitioning to part-time jobs instead of the outright suspension of job opportunities
    3. benefit the employees so that they are not low on essentials such as but not limited to:
      1. food reserves
      2. hygiene products
      3. ask the nations to pay their fees after they have the required conditions;
  7. Endorses the Member States and the United Nations to follow procedures in order to ease the debt paying process for Less Economically Developed Countries (LEDCs) which might be struggling paying their debts due to the ongoing pandemic which:
    1. will be done considering that LEDCs should prioritize preserving their residents’ lives and not their previous debts 
    2. might include 
      1. giving the in debt states more time for paying their debts back
      2. following the COVID-19 crisis, nations should pay their debts in full after proving their economical and political stability;
  8. Invites the states that are currently producing medical equipment or giving out loans to other countries for them to purchase such equipments to decrease the interest rates on those products and loans in order to help the LEDCs which are struggling with their debts while purchasing necessary medical equipments.