EU scrambles to fund global coronavirus response

BRUSSELS — The European Union and its member states are preparing a “sizeable” funding package to address the global impact of COVID-19 — now they just need to find the money.

An internal policy note from the European Commission, seen by Devex, outlines a number of possibilities, including “reorienting” ongoing development programs and those planned for this year, as well as tapping the reserves of the European Development Fund, or EDF, an aid fund that is paid into by member states separately from the EU budget.

The job is complicated by the ending of the EU’s seven-year budget cycle this year. An initial commission analysis seen by Devex says that in its main Development Cooperation Instrument, for instance, “there is very limited margin of manoeuvre, as there are only €7.5 million [$8.3 million] left of unallocated funds.”

As for the EDF, the commission estimates that around €600 million, and perhaps more, could be found by the end of the year. It says it will know more once it concludes its review and hears from EU member states on their plans. EU development ministers are due to meet April 8.

In the meantime, Koen Doens, director-general of DEVCO, the commission’s development arm, asked EU delegations to submit by March 31 a questionnaire designed to help identify “as precise a figure as possible of what, within your on-going and pipelined programmes, could be re-oriented and re-prioritised in line with the health and economic and social priorities set out in the [policy note].”

On health, the note identifies five priority funding gaps that the EU’s response could address: coordination of support efforts to the most vulnerable countries; preparedness and response capacities; regional surveillance and coordination; new diagnostics, therapeutics, and vaccines, plus building “surge capacity to manufacture them”; and protective equipment for health workers.

Actions on the social and economic impact of the crisis will aim to support incomes through social protection; stimulate the economy and labor demand — by lending to the health sector, for instance; protect workers by expanding health access; and ensure respect for human rights and democracy.

The detailed note won praise from European development watchers, with Alexei Jones, senior policy officer at the European Centre for Development Policy Management think tank, saying the commission is right to emphasize coordination between member states and development banks. Jones added, though, that “as always, everyone agrees on the need for coordination but nobody wants to be coordinated.”

Friederike Röder, senior director for the EU at social action platform Global Citizen, said that the commission and member states should prioritize funding to the Coalition for Epidemic Preparedness Innovations for work on the COVID-19 vaccine and to Gavi to roll it out, urging the commission to make an early, ambitious pledge to Gavi’s June replenishment.

As for mobilizing resources, Jones said one option is to repackage the EDF reserves into a targeted "facility" to support lower-income countries’ coronavirus response. He cited the Vulnerability FLEX mechanism created in 2009 to help African, Caribbean, and Pacific countries withstand economic shocks as an example of a similar tool.

The commission’s search for funds has also prompted it to cast its eye back over the European Fund for Sustainable Development — its flagship attempt to use €1.54 billion of EU taxpayers’ money to de-risk private sector investment in Africa and high-risk states neighboring the EU. Launched in 2017, just seven of the 28 development-friendly guarantee pipelines proposed by development banks have been signed off on so far. The commission note now says that, as part of its coronavirus response, it could work with the private sector on the “re-orientation and re-prioritisation of the guarantees.”

One EU member state official told Devex the guarantees could be reworked to focus on the socioeconomic impact of the coronavirus. “It is possible that not all proposed investment programs currently under preparation will be signed,” the official said. “So there could be a bit of wiggle room.”

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