Important details about Pandemic Emergency Financing Facility
World Bank Group on 21 May 2016 launched the Pandemic Emergency Financing Facility (PEF) to protect poorest countries against deadly pandemics.
The PEF is an innovative and fast-disbursing global financing mechanism. It will accelerate both global and national responses to future outbreaks with pandemic potential.
It was built and designed in collaboration with the World Health Organization (WHO) and the private sector, introducing a new level of rigor into both the financing and the response.
How the Pandemic Emergency Financing Facility works?
• It includes an insurance window, which combines funding from the reinsurance markets with the proceeds of World Bank-issued pandemic (catastrophe, or Cat) bonds, as well as a complementary cash window.
• In the event of an outbreak, the PEF will release funds quickly to countries and qualified international responding agencies.
• The insurance window will provide coverage up to 500 million US dollars for an initial period of 3 years for outbreaks of infectious diseases most likely to cause major epidemics.
• The major epidemics covered under the facility include new influenza pandemic virus A, B and C, SARS, MERS, Ebola, Marburg, Crimean Congo, Rift Valley, Lassa fever, etc.
• It will create the first-ever insurance market for pandemic risk. Significantly, it will be the first time World Bank Cat Bonds have been used to combat infectious diseases.
• All 77 countries eligible for financing from the International Development Association, the World Bank Group’s fund for the poorest countries, will be eligible to receive coverage under this facility.
• It is expected to be operational in 2016. Japan became the first country to commit 50 million US dollars in funding toward the new initiative.
Why the PEF was launched?
• Recent economic analysis suggests that the annual global cost of moderately severe to severe pandemics is roughly 570 billion US dollars, or 0.7 percent of global GDP.
• In the last few years, the world suffered from various pandemics like Ebola, Zika and MERS, etc putting thousands of lives at risk.
• During the past two years alone, Ebola crisis crippled the economies of Guinea, Liberia and Sierra Leone in West Africa
• If the PEF had existed in mid-2014 as the Ebola outbreak was spreading rapidly in West Africa, it could have mobilized an initial 100 million US dollars as early as July to severely limit the spread and severity of the epidemic.
• Instead, money at that scale did not begin to flow until three months later. During that three month period, the number of Ebola cases increased tenfold.
• The Ebola epidemic has claimed more than 11300 lives and cost at least 10 billion US dollars till date.