London (CNN Business)Three years ago, the World Bank issued new bonds to raise funds that could be used to help poor countries fight pandemics. The money is still sitting on the sidelines.
The bank was responding to an Ebola outbreak in 2014 that killed more than 11,000 people. It sold two sets of bonds that, under certain conditions, would release capital to fight the spread of disease.
One $225 million bond covers influenza and coronavirus outbreaks and now pays interest of over 8% a year. A second $95 million bond covers ailments such as Ebola and Lassa Fever, as well as coronavirus, paying investors interest of nearly 13% annually. Both are scheduled to mature on July 15.
Investors are now preparing for the possibility that the outbreak of the novel coronavirus in China will continue to spread, triggering a payout to the World Bank’s Pandemic Emergency Financing Facility. That would leave bond owners with much less to show for their investment.
Critics of the bonds say they won’t make much of a difference, even if the cash is released. They argue that onerous conditions required to release the money mean that it will arrive too late to help people in the path of the coronavirus outbreak.
The World Bank spearheaded the development of so-called pandemic bonds in response to the Ebola outbreak that swept across West Africa and beyond between in 2014 and 2015.
The idea was to quickly channel funding to the world’s poorest countries facing a major disease outbreak with pandemic potential. To qualify, the epidemic has to meet conditions based on the number of deaths, the duration of the outbreak, the speed at which the disease spreads and the number of countries affected.
But critics claim that conditions needed to trigger payouts are far too onerous, preventing or delaying the arrival of much needed help. They point to the ongoing Ebola outbreak in the Democratic Republic of Congo as one example where the bonds haven’t worked. The coronavirus hasn’t yet triggered a payment, either.
“The specific triggers were chosen in close coordination with the World Health Organization and no one could foresee that other outbreaks would behave differently,” a World Bank spokesperson said.
The Ebola outbreak, which began in 2018, has claimed more than 2,200 lives — more than that of the coronavirus. But no payments have yet been dispensed to fight the second largest Ebola epidemic on record because there have not yet been 20 deaths in a second country, a requirement sti