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For developing countries, global finance has virtually disappeared when they need to spend more on education, health and food security. As a result, climate financing has become an unaffordable luxury.

In the last three years, developing countries faced unprecedented challenges, a combination of external shocks: Covid-19, the Russia Ukraine war, food and energy security risks, and the four-decade-high global inflation. None of these shocks is of their making, yet they impact developing countries the most.

These shocks have amplified the development needs of the developing world and pushed their public finances into unsustainable zones. Meanwhile, global finance has virtually disappeared when developing countries need to spend more on education, health and food security. As a result, climate financing has become an unaffordable luxury. The forthcoming Summit for a New Global Financing Pact, starting June 22 in Paris, will discuss the financing required to address these interlinked crises.

Developing countries rely on three kinds of external financing:

• Private capital flows.
• Multilateral funding, which is long term and at below market rates.
• Unilateral funding, the majority of which is strategic and increasingly tied to infrastructure projects.

All three sources of funding have dried up. The monetary policy tightening of advanced economies has led to a reversal of private capital flows from developing economies. Multilateral development banks (MDBs) can extend new financing only if they receive fresh equity capital injections. Developing countries battling debt distress cannot access additional bilateral funding to restore economic dynamism and growth. There is an urgent need to unclog each source of global finance.

Private capital flows are fickle. They are quick to pull out from developing economies for higher yields. Derisking such capital flows can help fill an important gap in the global financial order. The following measures can do so.

The spillovers of the monetary policy actions of advanced economies need to be diluted. This necessitates fresh thinking on the frameworks that have characterised monetary policy decisions in advanced economies in the last quarter-century.

Developing countries should be given prompt and effective access to bilateral swap lines and International Monetary Fund (IMF) contingency lines to handle the liquidity crunch caused by the frequent reversals of capital flows. There is a distinct North-North concentration in the swap lines offered by the issuers of hard currencies. The North-South component needs to be strengthened equally. Advanced economies, led by the US, ought to be more inclusive in offering swap lines to developing countries, particularly those impacted by the spillovers of their monetary policies.

IMF offers an alternative to bilateral swap lines through its three contingency credit lines. These facilities have been under-utilised since their inception a decade and a half ago. It is incumbent upon IMF to expand their use by de-stigmatising them, widening access and streamlining costs.

Credit rating agencies need to be better regulated and made more accountable for the ratings assigned to emerging market economies. The ‘pro-advanced country bias’ of credit rating agencies has been well- documented. While the average rating they assign to an advanced economy is the highest possible, the rating they assign to an emerging market is close to junk status. This differential cannot be explained by their respective levels of economic growth rates, debts, fiscal deficits, inflation or current account deficits.

At the minimum, there needs to be an open dialogue on the frameworks adopted by credit rating agencies. This assumes great importance and urgency since countries are being called upon to attract foreign capital (and expand their current account deficits in the process) to invest in global public goods, including reducing global warming.

As for multilateral financing, the balance sheets of MDBs, such as the World Bank, are stretched to their limits. The operational model of MDBs involves leveraging their equity capital and near-perfect credit rating to raise low-cost funds from the capital market up to a multiple of their equity capital. They on-lend these resources to developing economies. While balance-sheet optimisation is essential and desirable, they need a fresh injection of equity capital to expand their lending.

Yet, the largest shareholders of MDBs are neither willing to recapitalise nor do they agree to dilute their shares to allow other countries to contribute more equity. This stalemate is hurting the developing world and humanity.

Since we need all hands on the deck to address global challenges, advanced economies should be forthcoming in their support to inject more equity into MDBs. The amounts involved are small, no matter which metric one considers. If they prefer, they may earmark the new funding for climate financing. Getting the buy-in of their citizens should be easy. It may entail appealing to their innate sense of fairness, being the early contributors to climate risks, and their concerns regarding this looming threat.

Most low-income countries are either already in a debt crisis or close to it. It is important to reduce the current debt stock through debt relief and to raise future debt in transparent, responsible and sustainable ways. Exchange rate risk is not just a concern of investors. For developing countries, a currency collapse makes debt relief meaningless. Collective efforts to develop relevant and affordable hedging instruments would help to mitigate these risks.

The crises facing developing countries can only be addressed if global finance is reset, especially in revisiting past practices that are ill-suited for emerging challenges.

Global leadership and legitimacy can only be preserved when incumbents respond purposefully to contemporary challenges. Else, competing choices will evolve and present themselves as the only rational alternatives for developing countries in the foreseeable future – business as usual risks irrelevance for the incumbent leadership of the world.

The writer is director-general, National Council of Applied Economic Research

For the first time, there would be recording of the Body Mass Index of all Assam Police personnel.

When India celebrates 76 years of Independence on August 15 this year, we are going to witness a health page turning for the police personnel in Assam. For the first time ever, it was decided that there would be recording of the Body Mass Index (BMI) of all Assam Police personnel including IPS/APS officers.

According to news reports, those personnel who do not meet the criteria or are in the obese (BMI 30+) category would be offered another three months to reduce weight (till November end), and still if they fall short of meeting the requisite BMI level they could be voluntarily retired from service; the exception being for those grappling with medical issues.

WHO definition

To put things into perspective, for adults, the WHO defines overweight and obesity as: (i) overweight is a BMI greater than or equal to 25; and (ii) obesity is a BMI greater than or equal to 30. However, the WHO also provided a rider by qualifying it that the criteria should be considered a rough guide because it may not correspond to the same degree of fatness in different individuals.

At the time of selection process, it is well known that police personnel undergo various health and fitness tests but somehow subsequently there is no regular and standardise health assessments. The personnel get drawn into regular work of maintaining law and peace in society with an assortment of unique situations, and fitness is relegated to the background. Unhealthy lifestyle and challenging work environment often lead to various life challenging health issues which include cardiovascular disease, and musculoskeletal, gastrointestinal and psychological disorders.

According to a news report of September 15, 2015, the average BMI of male police officers in Belgium is 26.52 which is above the healthy range (between 18.5 and 25) and it keeps increasing each year. Again, The Week, in its report dated January 9, 2015, quoted a study from the FBI which indicated that 80 per cent of law-enforcement officers in the US are overweight.

A study by the American Journal of Preventive Medicine concluded that 40.7 per cent of police, firefighters, and security guards are obese. A study in Lipids in Health & Disease reveals prevalence of obesity among Saudi police officers in Riyadh.

Closer home, a June 29, 2009, report in a national daily points out that nearly half of the police force in Chandigarh is grossly overweight.

Will the steps taken by the Assam police bring about a sea change in how we perceive the overall and all-round health of our police personnel? Time will tell, but there is no quick-fix solution. A holistic tailor-made fitness programme, followed by its effective and sustained implementation, a regular balanced diet to suit the work profile of the personnel, stress management training sessions, mandatory regular medical check-ups and creating awareness about healthy lifestyle can not only lead to a healthy BMI but also improve the life of police personnel and increase their productivity.

Baruah is Associate Fellow at NCAER, and Wankhar is a retired Indian Economic Service officer. Views are personal