RDM NEWS SWEKEEN may 03 2020

03 / /MAY / 2020 / /003
RDM WEEKEND NEWS
NEWS FINANCE RDM
A GLOBAL CRISIS LIKE NO OTHER
NEEDS A GLOBAL RESPONSE LIKE NO OTHER
BY KRISTALINA GEORGIEVA
IMFD
I have been saying for a while that this is a ‘crisis like no other.
• More complex, with interlinked shocks to our health and our
economies that have brought our way of life to an-almost complete
stop;
• More uncertain, as we are learning only gradually how to treat the
novel virus, make containment most effective, and restart our
economies; and
• Truly global. Pandemics don’t respect borders, neither do the
economic shocks they cause.
•
The outlook is dire. We expect global economic activity to decline on a scale
we have not seen since the Great Depression.
This year 170 countries will see income per capita go down – only months
ago we were projecting 160 economies to register positive per capita income
growth.
Actions taken
Exceptional times call for exceptional action. In many ways, there has been
a ‘response like no other’ from the IMF’s membership.
Governments all over the world have taken unprecedented action to fight the
pandemic—to save lives, to protect their societies and economies. Fiscal
measures so far have amounted to about $8 trillion and central banks have
undertaken massive (in some cases, unlimited) liquidity injections.
For our part, the IMF has $1 trillion lending capacity – 4 times more than at
the outset of the Global Financial Crisis—at the service of its 189 member
countries. Recognizing the characteristics of this crisis—global and fastmoving
such that early action is far more valuable and impactful—we have
sought to maximize our capacity to provide financial resources quickly,
especially for low-income members.
In this regard, we have strengthened our arsenal and taken exceptional
measures in just these two months.
These actions include:
• Doubling the IMF’s emergency, rapid-disbursing capacity to
meet expected demand of about $100 billion. 103 countries have
approached us for emergency financing, and our Executive Board
will have considered about half of these requests by the end of the
month.
• Reforming our Catastrophe Containment and Relief Trust, to
help 29 of our poorest and most vulnerable members—of which 23
are in Africa—through rapid debt service relief, and we are working
with donors to increase our debt relief resources by $1.4
billion. Thanks to the generosity of the UK, Japan, Germany, the
Netherlands, Singapore, and China, we are able to provide
immediate relief to our poorest members.
• Aiming to triple our concessional funding via our Poverty
Reduction and Growth Trust for the most vulnerable countries.
We are seeking $17 billion in new loan resources and, in this respect,
I am heartened by pledges from Japan, France, UK, Canada, and
Australia promising commitments totaling $11.7 billion, taking us to
about 70 percent of the resources needed towards this goal.
• Supporting a suspension of official bilateral debt repayments for the
poorest countries through end 2020—a ground-breaking accord
among G20 countries. This is worth about $12 billion to nations most
in need. And calling for private sector creditors to participate on
comparable terms—which could add a further $8 billion of relief.
• Establishing a new short-term liquidity line that can help countries
strengthen economic stability and confidence.
This is the package of actions that the International Monetary and
Financial Committee endorsed last week at our virtual Spring
Meetings.
Preparing for recovery
To help lay the foundations for a strong recovery, our
policy advice will need to adapt to evolving realities. We
need to have a better understanding of the specific
challenges, risks and tradeoffs facing every country as
they gradually restart their economies.
Key questions include how long to maintain the
extraordinary stimulus and unconventional policy
measures, and how to unwind them; dealing with high
unemployment and ‘lower-for-longer’ interest rates;
preserving financial stability; and, where needed,
facilitating sectoral adjustment and private sector debt
workouts.
We also must not forget about long-standing challenges
that require a collective response, such as reigniting trade
as an engine for growth; sharing the benefits of fintech
and digital transformation which have demonstrated their
usefulness during this crisis; and combating climate
change—where stimulus to reinforce the recovery could
also be guided to advance a green and climate resilient
economy.
Finally, in the new post-COVID-19 world, we simply
cannot take social cohesion for granted. So we must
support countries’ efforts in calibrating their social
policies to reduce inequality, protect vulnerable people,
and promote access to opportunities for all.
This is a moment that tests our humanity. It must be met
with solidarity.
There is much uncertainty about the shape of our future.
But we can also embrace this crisis as an opportunity—to
craft a different and better future together.
It represents a powerful policy response. Above all, it enables the
IMF to get immediate, ‘here and now’ support to countries and
people in desperate need. Today.
Kristalina Georgieva is the Managing Director of the
IMF.
PÁGINA 10