SOAS Research Online

A Free Database of the Latest Research by SOAS Academics and PhD Students

[skip to content]

Muehlich, Laurissa, Zucker-Marques, Marina, Fritz, Barbara and Kring N., William (2022) No One Left Behind? COVID-19 and the Shortcomings of the Global Financial Safety Net for low- and middle-income countries. Geneva, Switzerland: DA-COVID 19 Project Paper 05/22.

Text - Published Version
Download (2MB) | Preview


In this paper, we summarize the findings of the Freie Universität Berlin / Boston University / UNCTAD Global Financial Safety Net (GFSN) tracker on crisis finance since the onset of the COVID-19 pandemic. The GFSN is commonly known as the set of institutions on the global, regional and bilateral level that provide balance of payments finance to countries in temporary financial distress. We show that, when grouping the countries in different income classes, provision of liquidity is highly unequal. Essentially, high-income countries are insured by the GFSN more adequately than low-income countries. At the same time, we find that the dynamics of liquidity and solvency risk similarly differ between different income levels. The group of low and middle-income countries is exposed to an increasing risk of rising debt service payments that is likely to rise further over the course of upcoming phases of the COVID-19 pandemic and recovery. We find that the current GFSN does not allow support for all income country groups to respond adequately to a global liquidity crisis, as demonstrated by the COVID-19 pandemic. While the liquidity needs of low and middle-income countries (LICs and MICs) are not catered for by the GFSN to the same extent as are other income groups, especially advanced high-income countries (HICs) are awash with third-party crisis financial resources in relative terms, with upper MICs in a middle position. Addressing a temporary liquidity crisis quickly and comprehensively can prevent it from transforming into a solvency crisis. We argue that inequality in the GFSN is a potential source of solvency problems for countries that have less choice and access to voluminous disbursement of emergency liquidity with adequate policy conditionality.

Item Type: Monographs and Working Papers (Discussion Paper)
SOAS Departments & Centres: Departments and Subunits > Department of Economics
Date Deposited: 15 Nov 2023 15:11

Altmetric Data

There is no Altmetric data currently associated with this item.


Download activity - last 12 monthsShow export options
Downloads since deposit
6 month trend
6 month trend
Accesses by country - last 12 monthsShow export options
Accesses by referrer - last 12 monthsShow export options

Repository staff only

Edit Item Edit Item