This article is part of a series in which OECD experts and thought leaders — from around the world and all parts of society — address the COVID-19 crisis, discussing and developing solutions now and for the future. Aiming to foster the fruitful exchange of expertise and perspectives across fields to help us rise to this critical challenge, opinions expressed do not necessarily represent the views of the OECD.
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Following the global response to COVID-19, Financing for Development of the 2030 Agenda has become ever more critical because of the negative impact on government finances and fiscal space. Governments are increasing their debt to address the health crisis and its aftermath while at the same time working with a smaller pool of resources. The COVID-19 crisis has laid bare the structural inequalities and inadequate investment not only in healthcare and education but also—and most importantly—women’s engagement in the world of work and reducing their burden as unpaid carers. The violence-against-women shadow pandemic has also highlighted the deep-rooted discrimination that affects all societies in developed and developing countries.
COVID-19 has increased the debt burden of many developing nations in developing nations and has diminished fiscal space. According to the United Nations Conference on Trade and Development, developing countries’ repayments worldwide on their public external debts will cost USD 2.6-3.4 trillion in 2020 and 2021 alone. Hence, market analysts now suggest that almost 40% of emerging- and frontier-market sovereign external debt could be at risk of default in 2021. Although a very large COVID-19-related debt write-off is on the horizon, many countries will continue to have high debt levels and servicing.
In this context, a temporary Debt Service Suspension Initiative was endorsed by G20 finance ministers in April 2020 for the world’s poorest countries to help cope with the COVID-19 crisis. However, only a few debtor countries have taken up this offer, fearing how it might look to markets and rating agencies: “Moreover, private-sector lenders have largely refused to offer meaningful forbearance of their own, thereby undercutting governments’ efforts” (WEF-Project Syndicate, 2020).
In the words of an IMF official during a background briefing in April 2020, “We have never had something like that. We have had crisis in different parts of the world, always with the risk of spillovers, but it's really global and interconnected nature between health and economics that is just something that’s unprecedented in the true sense of the word”.
The effects of the responses to mitigate COVID-19 have disproportionately affected women, in particular those with higher economic and social vulnerabilities and directly exposure to the virus as essential workers (UN Women a, 2020) (UN Women b, 2020) (UN Women c, 2020) (UN Women d, 2020). In addition, the violence-against-women shadow pandemic has also highlighted the need for more investment in prevention strategies (UN Women a, 2020) (UN Women, 2020).
Governments have responded in various ways to the crisis, but only in some cases have addressed these negative effects on women. UN Women and UNDP launched the COVID-19 Global Gender Response Tracker to monitor the policies that have or have not included women’s practical and strategic needs in the government response. Out of 2,517 measures identified worldwide—covering health, fiscal, monetary, economic and social policies—992 were identified as gender sensitive (40%). Of these gender sensitive measures, 704 measures (71%) were implemented to address violence against women, in particular domestic violence. That left 288 measures (29%) for addressing women´s economic security (18%, or 177 measures) and for recognising and valuing unpaid care and domestic work (11%, or 111 measures).
Read more on the Forum Network: "Gender Equality in a Pandemic Era: The lessons we have learned can shape the future" by Natasha Mudhar, Founder, The World We Want
As countries move forward with recovery plans and measures, the disproportionate effect on women´s employment, as well as on unpaid care work, must be acknowledged. There must be specific expenditure on, and investment in women´s economic empowerment, and proper recognition of unpaid care and domestic work. Evidence is mounting that the gains around gender equality made in the past few decades may be lost, in some cases irreversibly, if governments do not include gender-sensitive responses in their recovery efforts (UN Women d, 2020).
Commitment to the SDGs in general—and SDG 5 in particular—may be sacrificed as countries face hard choices in order to service debt. Policy options that leave the inclusion pillar of SDGs by the wayside could lead to longer and more painful recovery efforts. It is important that international solidarity continues to be aligned with the SDGs as an agreed global framework to advance gender equality and women’s empowerment.
Swapping debt for expenditure and investment in attaining the targets of SDG 5 (where countries have already agreed to them) will focus attention on the structural issues that need to be tackled, and promote the costing of the policies that need to be implemented. It will also strengthen links with other SDGs that have important social, environmental and economic pillar targets, and contribute to strengthening governance and democracy.
In line with the Addis Ababa Action Agenda, a gender debt facility would support the targets most relevant to each country. It is important to remember that building on the strong gender focus in the negotiated outcome document, the Addis Ababa Action Plan on Transformative Financing for Gender Equality and Women’s Empowerment, there are five areas of commitment that suggest specific policy and financing actions that signatory countries can apply (Annex 1). This proposal to swap debt for gender equality aligns to these actions.
Find out more about the Addis Ababa Action Agenda striving to support the implementation of the 2030 Agenda for Sustainable Development
There are many links and multiplication effects between SDG5 and other SDGs that could strengthen a country’s fiscal space, as women and girls enter the workforce in a formalised manner; take advantage of educational opportunities; have better access to health (including reproductive and sexual health); face less formal discrimination (changing legal frameworks); or contribute to reducing climate change. The recognition and valuing of unpaid care and domestic work requires a multi-dimensional approach including fiscal, monetary, macroeconomic and employment policies. Box 1 reflects a number of these policies that need to be incorporated into the recovery efforts and require specific expenditure and investment efforts by governments.
Box 1: Policies that recognise and value unpaid work and domestic work
An important aspect of any debt swap is the conditionalities imposed on countries by the lenders. The concluding observations of the Convention on the Elimination of all types of Discrimination Against Women (CEDAW), which link up to the SDG targets chosen by countries, can be used to draw the road maps for specific investment and expenditure as well as financial conditionalities for countries. They provide an extraordinarily strong plan for governments to change legislation and policy, removing discriminatory practices that continue to affect women; in many countries, these concluding observations are incorporated into national action plans on gender equality or to combat violence against women. The process of reporting on CEDAW every four years by governments, the inclusion of civil society, and the evaluation of the submitted reports by committee experts guarantees a rigorous assessment.
There is a growing body of evidence supporting the idea that gender equality makes good business sense (EIGE, 2017) (UN Women, 2015) (McKinsey Global Institute, 2018). It is estimated that in the Asia Pacific region alone, a whopping USD 4.5 trillion could be added to the collective regional GDP by 2025, which would represent a 12% increase over the “business as usual” trajectory. China and India would benefit from the largest absolute and relative gains, as the largest economies, but in every country in the region 58% of the opportunities created would come from raising the female labour participation rate, 17% from raising the number of hours women work and 25% from more women working in higher productivity sectors (McKinsey Global Institute, 2018).
Private lenders and financial institutions can also do more in creating financial inclusion opportunities, ranging from bank accounts to loans for women’s businesses. This business case needs to inform markets and rating services as well as private lenders, who can be encouraged to reduce debt burden in exchange for improvement of government finances and private sector bottom lines. Businesses must understand their role to balance paid and unpaid care work not only between women and men, households, government and the private sector, but also to reduce debt burdens in the longer term, as women assert themselves as tax payers and investors in the economy.
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- EIGE. (2017). Economic Benefits of Gender Equality in the European Union Report on the empirical application of the model. Luxembourg: Publications Office of the European Union.
- IMF. (2020, August 10). Transcript of Background Briefing Conference Call on IMF Resources and the Fund’s Strategy to Help Countries Combat COVID-19. Retrieved from https://www.imf.org/en/News/Articles/2020/04/03/tr040120-transcript-background-briefing-conference-call-imf-resources-strategy-help-combat-covid-19
- McKinsey Global Institute. (2018). The Power of Parity: Advancing Women's Equality in Asia. Shanghai: McKinsey & Company.
- MDRC. (2019). Microfinance in the United States. Early Impacts of the Grameen America Program. Washington, D.C.: MRDC.
- UN Women. (2015). Progress of the World's Women. New York: UN Women.
- UN Women. (2020). Covid-19 and Essential Services Provision for Survivors of Violence Against Women and Girls. Brief, UN Women, Covid-19 Response, WHO, UNDP, UNODC and UNFPA, New York (NY) - USA.
- UN Women. (2020). Covid-19 and Violence Against Women and Girls: Addressing the Shadow pandemic. Policy Brief No. 17, UN Women, and Covid-19 Response, New York (NY) - USA.
- UN Women. (2020). The Covid-19 Shadow Pandemic. Domestic Violence in the World of Work. A Call to Action for the Private Sector. UN Women, in partnership with Women's Empowerment Principles and Covid-19 Response, and funding from the European Union, (New York?).
- UN Women. (2020). The First 100 Days of Covid-19 in Asia and the Pacific. Executive Summary, Bangkok - Thailand.
- UN Women a. (2020). Addressing Emerging Human Trafficking Trends and Consequences of the Covid-19 Pandemic. UN Women, in collaboration with the Organization for Security and Co-operation in Europe (OSCE), (?).
- UN Women b. (2020). Asia-Pacific Needs Assessment for More Gender-inclusive Entrepreeneurship. Highlights on Impacts from Covid-19. Bangkok - Thailand.
- UN Women c. (2020). Beyond the Lockdowns: Women, Peace & Security and Covid-19 in Asia and the Pacific. Action Brief #3, (Bangkok?).
- UN Women d. (2020). Covid-19 and the care Economy: Immediate Action and Structural Transformation for a Gender-responsive Recovery. Policy Brief No. 16, UN Women, and Covid-19 Response, New York (NY) - USA.
- UNCTAD. (2019). Financing for Development: International Development Cooperation and Interrelated Systemic Issues. United Nations Conference on Trade and Development, UNCTAD, Intergovernmental Group of Experts on Financing for Development, Geneva - Switzerland.
 See, for example, the work of the Institute for Global Environmental Strategies (IGES) at https://sdginterlinkages.iges.jp/ and https://sdginterlinkages.iges.jp/visualisationtool.html. Although no negative or tradeoff links can be detected for the SDG 5 targets, there is a large amount of data (indicators) missing, which also poses a challenge for monitoring, but that could also be one of the areas of investments (gender statistics).
 This type of conditionality, which could be thought of as radical, has been proposed for ensuring countries honour their commitment to the reduction of CO2. This has been proposed by the President of the Central European Bank, Christine Lagarde.
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