To cope with the socio-economic impact of COVID-19, countries have sought help from multilateral development banks (MDBs) and international financial institutions (IFIs). As of end-September 2020, MDBs and IFIs have committed close to $40 billion worth of financing for Asia-Pacific countries. Over half of the amount is committed by such institutions from the region.
This financial support initially focused on enhancing the capacity of public health systems and then gradually shifted to fostering economic recovery. However, MDBs and IFIs’ financial support remains insufficient. Lending to cope with COVID-19 falls short of that during the Global Financial Crisis of 2008. Built-in austerity conditions of the loans could reverse the hard-earned recovery gains and impair sustainable development prospects. Actions will be needed to strengthen MDBs/IFIs’ financing capacity, stop or reduce built-in fiscal austerity, and enhance countries’ spending to recover and build long-term sustainability and resilience.