during COVID-19: Landmark commitments

BOX 2.3

Updated G20 action plan to support the global economy during COVID-19: Landmark commitments

• Extending the Debt Service Suspension Initiative to June 2021 to help developing countries finance their coronavirus response and recovery programs • Commitment to consider a further six-month extension to the Debt Service Suspension

Initiative at the International Monetary Fund and

World Bank Group Spring Meetings in April 2021 • Agreement in principle to a historic Common

Framework for Future Debt Treatments to provide debt restructuring to vulnerable countries on a case-by-case basis, bringing

together G20 and Paris Club official creditors for the first time • Supporting the World Bank Group’s initiatives to make available US$16 billion of fast-track financing for developing countries’ access to COVID-19 tools, with the aim of supporting equitable and affordable access for all • Accelerating action to address longer-term global challenges, including harnessing new opportunities through the digital economy and supporting the potential for an environmentally sustainable and resilient recovery

Source: G20 2020.

investment plan. The fask force argues that “if cities and communities are ignored again [as they were after 2008] by markets and states, the multilateral system might collapse at the next global shock” (Buchoud et al. 2020, 13). Others emphasize that “top-down infrastructure projects may be tempting for COVID-19 recovery, but without community engagement many such efforts have failed in the past” (Null, Rubnitz, and Smith 2020).

Various measures are foreseen, and many are being activated worldwide to maintain, or even accelerate, public investment projects at the subnational level after the pandemic ends. Figure 2.10 summarizes measures applicable domestically, including grants and OSR, as well as relaxing budget rules, increasing capital transfers and subsidies, easing the access to long-term projects on both credit and financial markets, and supporting project preparation and implementation. However, it is important to note that asset-based financing may offer an option that can be mobilized in short-, medium-, and long-term efforts (Kaganova 2020). Other financing mechanisms—such as public-private partnership arrangements or other equity financing—may be activated in developing countries cautiously in the future.

Donors keep promoting and testing private investments in urban development and services with mixed results and slow progress. The postpandemic recovery underscores the great need for private resources to supplement the scarce aids and fiscal funds discussed. The private capital floating around the world seeking investment opportunities is estimated to be nearly US$100 trillion, while the estimated public infrastructure investment gap (national and subnational combined) is about US$6 trillion (UN-Habitat 2020). Supply well exceeds demand, but the two sides of the market appear to be disconnected. A great potential is there, but cities must not only attract but also activate private capital to make themselves more sustainable during postpandemic recovery. Electricity, water, sanitation, solid waste, or even some health care services are quasi-private goods; they can be and have been provided in part by private