IMF urges countries to approach Fund to contain economic damage
On Friday, March 27, Kristalina Georgieva, Managing Director of the IMF, gave an update on the efforts of the Fund to help countries deal with the economic consequences of the Covid-19 pandemic. It would be crucial to prevent liquidity problems from becoming solvency issues, she said in a virtual press briefing.
“We do project a recovery in 2021. In fact, there may be a sizeable rebound, but only if we succeed with containing the virus everywhere and prevent liquidity problems from becoming a solvency issue. A key concern about a long-lasting impact of the sudden stop of the world economy is the risk of a wave of bankruptcies and layoffs that not only can undermine the recovery but can erode the fabric of our societies.”
The number of requests by countries seeking help from the IMF has been rising rapidly. 50 low-income and 31 middle-income countries have approached the Fund for emergency financing so far.
“Over 80 countries have placed requests and more are likely to come. And normally we will never have had more than a handful of requests at any one time. Yesterday, our Executive Board approved the first of those requests for the Kyrgyz republic in a record fast disbursement.”
To keep meeting the economic challenges during the coronavirus pandemic, the Fund urges countries to access its financial and monetary tools sooner rather than later.
“We are proposing to double our emergency financial capacity, simplify our processes, fill the gap in our concessional financing. Second, we are reviewing our lending instruments to see what might be missing in the context of this crisis so that we can respond appropriately. What we want is: countries to approach the fund and access the tools they require for the needs they have. The sooner they do it, the sooner they obtain necessary financing, the sooner they implement good policy. The better chance we have to contain the damage and move towards recovery.”
Georgieva emphasized that the IMF is doing everything to respond to this extraordinary health crisis and help mitigate the economic fallout from it.
“It is all hands on deck at the IMF. We are working very hard to strengthen our response capacity as much as possible.”