The International Monetary Fund (IMF), has pledged continuous support to meet the pressing needs of emerging markets and low-income countries.
The Managing Director of the IMF, Kristalina Georgieva made this remarks whilst delivering a speech at the ‘New Bretton Woods Moment’ on 15th October, 2020.
“Today we face a new Bretton Woods ‘moment’” A pandemic that has already cost more than a million lives. An economic calamity that will make the world economy 4.4 % smaller this year and strip an estimated $11 trillion of output by next year. And untold human desperation in the face of huge disruption and rising poverty for the first time in decades.
“We will continue to pay special attention to the urgent needs of emerging markets and low-income countries—especially small and fragile states, helping them to pay doctors and nurses and protect the most vulnerable people and parts of their economies”.
According to the IMF Managing Director, the Fund is working tirelessly to support a durable recovery and a resilient future as countries adapt to structural transformations brought on by climate change, digital acceleration and the rise of the knowledge economy.
“Since the pandemic began, we have committed over $100 billion and we still have substantial resources from our $1 trillion in lending capacity”.
She further noted that the unprecedented action of the Fund was only possible due to the generous support of members.
“The doubling of the New Arrangements to Borrow and a new round of bilateral borrowing arrangements preserves this financial firepower. Members have also stepped up with essential contributions to our Catastrophe Containment – and Relief and Poverty Reduction and Growth—Trusts”.
This, according to the IMF Managing Director, has allowed the Fund to support its low-income members with debt relief and to triple its concessional lending.
She indicated that the IMF is engaging with its members to further boost concessional lending capacity, adapt lending toolkit and increase support for capacity development.
The IMF boss stated that the world knows what action must be taken right now. This she stated, is a durable economic recovery which is only possible if we beat the pandemic.
She urged members to make Health measures a priority and to support production and distribution of effective therapies and vaccines to ensure that all countries have access.
She further advised nations to continue to support workers and businesses until a durable exit from the health crisis is found. She also calls for greater debt transparency and creditor coordination as to help countries manage their debts.
“We have seen global fiscal actions of $12 trillion. Major central banks have expanded balance sheets by $7.5 trillion. These synchronized measures have prevented the destructive macro-financial feedback we saw in previous crises”.
“…almost all countries are still hurting, especially emerging market and developing economies. And while the global banking system entered the crisis with high capital and liquidity buffers, there is a weak tail of banks in many in emerging markets. We must take measures to prevent the build-up of financial risks over the medium term.
“Beyond this, where debt is unsustainable, it should be restructured without delay. We should move towards greater debt transparency and enhanced creditor coordination. I am encouraged by G20 discussions on a Common framework for Sovereign Debt Resolution as well as on our call for improving the architecture for sovereign debt resolution, including private sector participation.
