GENEVA, Switzerland (AFP) — The UN called Monday for a US$2.5-trillion aid package to help developing countries weather the COVID-19 pandemic, including debt cancellation and a health recovery “Marshal Plan”.

A report from the United Nations Conference on Trade, Investment and Development (UNCTAD) noted that the two-thirds of the global population who live in developing countries (excluding China) face “unprecedented economic damage” from the crisis.

“It is… a matter of immediate urgency for the international community to co-ordinate appropriate economic rescue packages with a more global reach to address the looming financing gap which many developing countries are now imminently facing,” the report said.

In the two months since COVID-19 began spreading beyond China, developing countries have been hit hard by capital outflows, currency depreciations, and lost export earnings, notably from falling commodity prices and declining tourist revenues.

In most areas, the impact is worse than during the 2008 financial crisis, UNCTAD said.

“Economic fallout from the shock is ongoing and increasingly difficult to predict but there are clear indications that things will get much worse for developing economies before they get better,” UNCTAD Secretary-General Mukhisa Kituyi said in a statement.

The report was released as the number of cases soared past 700,000, including more than 33,500 deaths, and with nearly 3.4 billion people under lockdown.

– No ‘magic money tree’ –

While leading economic powers have put together unprecedented government rescue packages, UNCTAD stressed that developing countries do not have “a magic money tree”.

“Lacking the monetary, fiscal and administrative capacity to respond to this crisis, the consequences of a combined health pandemic and a global recession will be catastrophic for many developing countries,” it warned.

UNCTAD’s head of globalisation and development strategies Richard Kozul-Wright pointed out that the world’s 20 largest economies had “promised to do ‘whatever it takes’ to stop their firms and households from taking a heavy loss of income.”

“But if G20 leaders are to stick to their commitment of ‘a global response in the spirit of solidarity,’ there must be commensurate action for the six billion people living outside the core G20 economies,” he said.

Monday’s report called on the global community to provide an aid package of US$2.5 trillion (2.3 trillion euros) to developing countries.

That included a US$1.0-trillion liquidity injection made possible by reallocating existing special drawing rights at the International Monetary Fund, as well as a new, large allocation.

It also included US$1.0 trillion in debt relief, as well as a US$500-billion “Marshall Plan for Health Recovery” funded from already-pledged but never delivered official development assistance.

UNCTAD said that over the past decade, wealthy countries had failed to dish out US$2.0 trillion in promised development aid to developing countries.