JOHANNESBURG (BLOOMBERG) – The United Nations Development Programme proposed the immediate introduction of a temporary basic income that could stem the spread of the coronavirus pandemic by allowing the world’s poorest people to stay at home.
A six-month guaranteed handout for 2.7 billion living below or just above the poverty line in 132 developing countries would cost around US$199 billion (S$275 billion) per month and could be funded by re-purposing external debt service payments, the agency said in a report published on Thursday (July 23).
With the rate of infections increasing in many poorer nations with debt costs crowding out health and social expenses, UN Secretary-General Antonio Guterres has called for a standstill for all developing economies.
Those countries are set to spend US$3.1 trillion in debt repayments this year and the UNDP said its proposal would allow them to briefly re-purpose the funds to address the damage wrought by the crisis.
The plan would require 12 per cent of the expected total financial response to pandemic in 2020, which is equivalent to one-third of what developing countries owe in external debt payments this year, the UNDP said.
Already the Group of 20 leading economies has offered a Debt Service Suspension Initiative to the world’s poorest nations that runs through December. So far, 42 countries have requested help under the plan, leading to the suspension of US$5.3 billion in repayments.
The UNDP said the programme could also be funded by energy subsidies, after a decline in oil prices, and through emergency cash transfers. It is particularly necessary in developing nations, where nine out of ten workers have informal employment and can’t earn money if they are at home, the agency said.
“Unprecedented times call for unprecedented social and economic measures,” Achim Steiner, the UNDP’s administrator said in a statement. “A temporary basic income might enable governments to give people in lockdown a financial lifeline, inject cash back into local economies to help keep small businesses afloat, and slow the devastating spread of Covid-19.”