COVID-19 pandemic costs the world $8trn ― IMF
Managing Director of the International Monetary Fund (IMF), Kristalina Georgieva, said on Thursday that the world has spent about $8 trillion so far to battle the COVID-19 pandemic and its effects.
The IMF boss who delivered a speech, ‘Confronting the Crisis: Priorities for the Global Economy,’ ahead of the World Bank/IMF Spring Meetings next week, said the pandemic would precipitate the worst recession since the Greater Depression of the 1930s.
According to her, “All governments have sprung into action and, indeed, there has been significant coordination. Our Fiscal Monitor next week will show that countries around the world have taken fiscal actions amounting to about $8 trillion.
“In addition, there have been massive monetary measures from the G20 and others. Many of the poorer nations are also taking bold fiscal and monetary action, even as they grapple with this fundamental shock to their systems—and with far less firepower than their rich-country counterparts.”
She added, “It is already clear, however, that global growth will turn sharply negative in 2020, as you will see in our World Economic Outlook next week. In fact, we anticipate the worst economic fallout since the Great Depression.
“Just three months ago, we expected positive per capita income growth in over 160 of our member countries in 2020. Today, that number has been turned on its head: we now project that over 170 countries will experience negative per capita income growth this year.
“The bleak outlook applies to advanced and developing economies alike. This crisis knows no boundaries. Everybody hurts.”
According to her, if the pandemic fades in the second half of the year and allows for a gradual lifting of containment measures and reopening of the economy, there would be a partial recovery in 2021, adding, however, that the outlook could get worse depending on many variable factors, including the duration of the pandemic.
She said the outlook would eventually be determined by the policy route taken by governments. So, she called on governments across the globe to continue with essential containment measures and support for health systems; shielding affected people and firms with large, timely, targeted fiscal and financial sector measures; reducing stress to the financial system and avoiding contagion and planning for recovery.
Georgieva said IMF had $1 trillion in lending capacity, which it had put at the service of its membership.
She said, “We are responding to an unprecedented number of calls for emergency financing from over 90 countries so far. Our Executive Board has just agreed to double access to our emergency facilities, which will allow us to meet the expected demand of about $100 billion in financing. Lending programs have already been approved at record speed, including for the Kyrgyz Republic, Rwanda, Madagascar, and Togo with many more to come.
“We are reviewing our tool kit to see how we might better use precautionary credit lines to encourage additional liquidity support, establish a short-term liquidity line, and help meet countries’ financing needs via other options—including the use of SDRs. And where we might be unable to lend because a country’s debt is unsustainable, we will look for solutions that can unlock critical financing.”
