IMF BLOG: HIGH-SPEED INTERNET NEEDED

A blog from the International Monetary Fund (IMF) has highlighted the need for internet connectivity to hasten financial inclusion, among others.

According to Ms. Mercedes Garcia-Escribano, while “COVID-19 and the Great Lockdown triggered a mass migration from analog to digital and highlighted that access to the Internet is crucial for socioeconomic inclusion, “ many countries may see widened income equality.

High-speed Internet is key for working from home, for children’s education when they can’t attend school in person, for telemedicine, for benefiting from social support programs, and for enabling access to financial services for everyone, especially for those living in remote areas, she said.

However, internet usage remains a luxury: half of the world’s population does not have access to the Internet, either through a mobile device or through fixed line broadband. “

The digital divide—the gap between those who have Internet access and those who don’t—is more like a chasm, both within and between countries and there is need for governments to foster a digital-friendly business and regulatory environment for the private sector.

Ms. Garcia-Escribano posited that government support is needed to  ensuring the Internet investment is complemented with universal electricity access. Also subsidies may be needed so that all households—including disadvantaged groups and those in rural and remote areas—have access to quality Internet, and to ensure there is no digital gender gap.

For example, in response to the COVID-19 crisis, the governments of El Salvador, Malaysia and Nepal have introduced Internet fee discounts or waivers.

“Policies should also be geared to closing the Internet gap for firms. Broadening small businesses’ access to financial products such as loans will allow these firms to undertake productive investments in information and communications technology. Governments could also see fiscal savings from digitalization. They can lower the public cost of tax compliance through greater access to taxpayer data and improved spending efficiency, which in turn, may help financing these policies, she said.

Given the increasing role of the Internet for the economy and for accessing public services, policies to foster an inclusive recovery must aim to tackle the digital divide within and between countries.