Pandemic-related obligations are the subject of close scrutiny after the Ebola epidemic

LONDON (Reuters) – The World Bank's financing instruments to help emerging countries cope with pandemics are in the spotlight, with the latest deadly Ebola epidemic still not generating payments .

Following the 2013-2016 Ebola outbreak that ravaged Sierra Leone, Guinea and Liberia and killed at least 11,300 people, the World Bank launched in 2017 a surety bond and instruments for And insurance to put in place a mechanism to quickly mobilize funds to combat outbreaks of infectious diseases.

But if another Ebola outbreak – the second most serious ever recorded – has plagued for a whole year and has been hailed as an emergency by global health by the World Health Organization, the instruments of fight against the pandemic have not yet been resolved.

Payments are triggered once the virus has crossed an international border and killed at least 20 people in at least two countries.

The virus has killed more than 1,800 people in the Democratic Republic of Congo and two in Uganda, which means the payment threshold has not been reached. [nL8N23K0UP] [nL8N24V7VA]

On Thursday, the Congolese authorities confirmed that a third case had been diagnosed in Goma, a densely populated city, raising fears that the virus would settle in the commercial crossroads of the Rwandan border, hundreds of kilometers away. from where the outbreak had been detected for the first time. [nL8N24X3DF]

Asked about the lack of payment, Michael Bennett, Head of Derivatives and Structured Finance at the Financial Markets Division of the World Bank, explained that the pandemic bonds were structured to cover cross-border events.

For payments to be triggered, they "require a definite number of confirmed cases or deaths in more than one country," he said.

"Then the payment also depends on the number of deaths and the number of countries involved."

PROCESS OF APPROVAL

Pandemic emergency funding, which includes funding for an Ebola outbreak, includes $ 95 million in bonds and $ 55 million in insurance. It would also provide funding for a pandemic caused by other infectious diseases such as Marburg, Crimean-Congo hemorrhagic fever or Lbada fever.

The payments would be staggered: a death toll of 250 would trigger a disbursement of $ 45 million, while 750 deaths would result in an additional payment of $ 45 million. The remaining $ 60 million is paid when the death toll reaches 2,500.

Funded by the German and Japanese governments, the instruments bear a coupon corresponding to LIBOR plus 11.1%. According to Refinitiv data, the bond is or has been owned by badet managers such as Baillie Gifford, Amundi and Oppenheimer.

But the lack of profitability of the World Bank's instruments raises the question of whether they can actually provide governments with timely badistance to deal with crises, given the small, rigorous print.

"The problem is that when there are disasters, fast disbursement instruments are often lacking because of the length of approval processes," said Bodo Ellmers, Policy Officer at the European Debt Network. development (EURODAD).

"They raised the funds ex ante. So there is a supply of money that can immediately be used. The case we have now is that there is a financial need, but the criteria are so strict that the facility does not make any payments. "

Bennett, of the World Bank, said the pandemic mechanism was specifically designed to ensure cross-border events rather than outbreaks in one country.

But with the instruments expected to mature next summer, the bank is studying possible structural changes, such as looking for a cost-effective way to insure events in a single country, he said.

He is also studying instruments that could help fight the epidemics of different viruses that affect humans and even livestock, such as pigs and poultry.

"Of course, we always run the risk of setting up a structure that takes into account a previous event," Bennett said. "If we completely change the structure to take into account the current event, we may not take it for another."