ALMOST THREE years ago, Jim Yong Kim, then president of the World Bank, announced an innovative idea to use capital markets to help poor countries cope with pandemics. The bank launched a specialized pandemic bond and derivatives fund that would pay a handsome interest rate to investors, on the understanding that investors would lose money if the bonds were needed to fight a spreading disease. The pandemic bonds have yet to pay out. Now is the time.

Mr. Kim said in June 2017, at the time of the launch, “We are moving away from the cycle of panic and neglect that has characterized so much of our approach to pandemics.” It was a noble goal, but the cycle remains. The new coronavirus disease, covid-19, is spreading around the world, people are panicking, and many poor countries with weak health systems stand to be hit exceedingly hard. The coronavirus transmits between humans and has a high mortality rate among the elderly, according to tentative data from China, where the outbreak began. Low- and middle-income countries are precisely those that the World Bank bonds were designed to help out, and, as Bill Gates pointed out last week, their health-care systems are already “stretched thin.”

The World Bank’s Pandemic Emergency Financing Facility grew out of the Ebola pandemic in 2014-2015 that killed 11,314 people in Guinea, Liberia and Sierra Leone. After-action studies concluded that the world needed a well-funded, rapid-reaction mechanism, a sort of financial firefighting team that could deploy rapidly in a crisis. The PEF has two channels: one an insurance window that would pay out from the bonds and derivatives, designed to help the poorest countries cope with a cross-border, large-scale outbreak of certain diseases; the other, a cash window for containment of illnesses not eligible for the first. The cash window has been used for the Ebola outbreak in the Democratic Republic of the Congo.

Now it’s time to open the PEF insurance window. The fine print specifies that funds will be released when at least 20 people have died in the country where an outbreak began and in at least one other country, as long as both of those countries are eligible for funds from the World Bank. The PEF insurance funds can be released only when an outbreak is growing, and the first possible payout is 84 days after the start of the outbreak. In this case, that means the first payout date could be March 23.

Covid-19 has caused more than 3,000 deaths around the world, and the number is growing. The maximum potential payout from the PEF insurance window is $195.83 million. Investors will suffer, but they knew the risks. The World Bank should open the window as soon as possible.

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