To offset the crushing costs of trying to stem a global novel coronavirus epidemic, the World Bank and partners announced the creation of “pandemic bonds” several years ago: the idea was to leverage private capital from Wall Street firms that would help stricken poor countries.
But since the bonds were launched in 2014, backed by about $190 million in promised financing from donor countries, investors have reaped more profits than countries battling epidemics. And even in the current pandemic, any payout to stricken countries would barely make a dent into what the outbreak has cost them.
Former World Bank chief economist Lawrence Summers has described the bonds as “financial goofiness.” The bonds were launched in the aftermath of the devastating Ebola outbreak in West Africa, and the current coronavirus outbreak is exposing flaws in their design.
“The countries that need help are not the ones getting the funds,” said Felix Stein of the University of Cambridge, who has researched the bonds. “It’s the Wall Street investors that are benefiting.″
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