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IMF Managing Director urges further action to secure a Resilient Recovery

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July 18, 2020 (MLN): Ms. Kristalina Georgieva, Managing Director of the International Monetary Fund (IMF), has said that we have entered into a new phase of the crisis, one that will require further policy responsiveness and action to secure a sturdy and shared recovery as well as increased international cooperation.

At the conclusion of the virtual meeting of the Group of 20 (G20) Finance Ministers and Central Bank Governors, chaired by Saudi Arabia, she stated that due to the continuing impact of the COVID-19 pandemic, the global economy faces a deep recession this year, with partial and uneven recovery expected in 2021. While there remains great uncertainty on the outlook, the unprecedented actions taken by the G20 countries and others have helped to avert a much worse outcome. The G20 Action Plan is key to this effort.

To support countries in fighting the crisis and to prevent long-lasting scarring of the global economy particularly waves of bankruptcies, risks to financial stability, high unemployment, and increasing inequality, Ms. Kristalina Georgieva emphasized on the following key policy actions:

First, the public health response remains the main priority to protect people, jobs, and economic activity. Across the world, countries have implemented exceptional measures to support individuals and workers. These lifelines should be maintained as needed and, in some cases, expanded.

Second, supportive fiscal and monetary policies will need to continue until a safe and durable exit from the crisis can be secured. Premature withdrawal of this support could derail the recovery and incur larger costs.

Third, policies need to prepare for and support transformational change, as some sectors may permanently shrink, while others such as digital services will expand. Adapting to change in an inclusive manner will require adequate social protection, and training and job search assistance to workers.

Fourth, there is a need to unite to help the poorest and most vulnerable economies, especially those struggling with high debt or dependent on hard-hit sectors. The G20’s Debt Service Suspension Initiative (DSSI) has been commendable and consideration will be given to extending it. In addition, to make it even more effective, greater private sector participation, and greater debt transparency, should be strongly promoted. Beyond the DSSI, there is a need to fill gaps in the international debt architecture and think about more comprehensive debt relief for many countries and IMF is ready to support these efforts, she added.

She further emphasized that the crisis can be used as an opportunity to build a better future for all people by: maximizing the potential of the digital economy; promoting green investment to combat climate change in a job-rich manner; and investing in human capital to build a more inclusive economy.

“The IMF has moved with unprecedented speed providing emergency financing to 72 countries in four months and we will continue to support our member countries relentlessly. We see especially pressing needs to assist low-income countries, and small and fragile states which have been hit very hard with the support of our membership,” she said.

Further she assured that IMF continues to mobilize additional concessional resources to help them as it is stepping up action to make better use of existing Special Drawing Rights (SDRs).

“The IMF will explore additional tools that could further help in this crisis that is like no other and play our role at the center of the global financial safety net in this time of unprecedented need for our member countries,” she added.

Posted on: 2020-07-18T23:24:00+05:00

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