The former head of the Reserve Bank of India, speaking at the “DBS Asian Insights Conference 2020: Navigating a Post-Pandemic World” held in Singapore July 23-24, said the United States and China have to “step up to the plate” and jointly lead in providing developing countries “the resources to fight the pandemic.” Raghuram Rajan was Director of Research and Chief Economist at the IMF (2003-2006), and then Governor of the Reserve Bank of India from 2013 to 2016. He is now a University of Chicago Booth School professor of finance.
Dr. Rajam described the extreme strain, or even impossibility, of developing countries trying to borrow, domestically or internationally, to put the equivalent of 5% of their GDP into coping with the virus and resulting hunger, while some developed countries have expended 20% of their much larger GDP. He cited the IMF records showing that 45 of the poorer countries have borrowed half their GDP in a year, especially from the IMF, which does not negotiate write-downs of debt.
