Thursday, April
02, 2020 / 06:53 PM / IMF / Header Image Credit: Euronews
Good morning. The governing body of the IMF-the
International Monetary and Financial Committee (IMFC), representing our 189
member countries- met today to discuss the unprecedented challenge posed
to the world by COVID-19.
Following yesterday's G20 Leaders meeting, the IMFC
took stock of the rapidly developing health crisis, it's impact on the economy,
measures taken to address these impacts, and how well the Fund is equipped to
help its member countries.
I noted that since the IMFC last met just a few
weeks ago:
- We have reassessed the prospect for
growth for 2020 and 2021. It is now clear that we have entered a
recession - as bad as or worse than in 2009. We do project 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.
- To avoid this happening, many countries
have taken far-reaching measures to address the health crisis and to
cushion its impact on the economy - both on the monetary and on the fiscal
side. The G20 yesterday reported fiscal measures totaling some 5
trillion dollars or over 6 % of global GDP. It is important for those
ahead in taking action to share their experience with those still
behind. To support this, last night the IMF launched a policy actions
tracker for 186 countries to help us all to see who is doing what. We will
be updating this information regularly and will provide country-specific
analysis in line with our surveillance mandate.
- We have seen an extraordinary spike in
requests for IMF emergency financing - some 80 countries have placed
requests and more are likely to come. Normally, we never have more than a
handful of requests at the same time. Yesterday our Executive Board
approved the first of these emergency requests for the Kyrgyz Republic, a
record fast disbursement.
- We also see a wide range of problems
building up in emerging markets - the spread of the virus, the shut-down
of economies, capital outflows and - for commodity exporters - a price shock. Many of these emerging markets will experience a contraction
as necessary containment measures take their toll, and are shocked by
reduced global demand for their exports - tourism, commodities, and
manufactured goods – that provide critical streams of foreign exchange.
Our current estimate for the finance needs of emerging markets is $2.5
trillion - a lower- end estimate for which their own reserves and domestic
resources would not be sufficient.
- We are being asked by our members to do
more, do it better, and do it faster than ever before - and to do it in
collaboration with the World Bank and our other partners. How can we meet
that challenge? Specifics:
- First, we are proposing to double our
emergency financing capacity; simplify our processes; and 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
and so that we can design an appropriate response. For example, can
we expand the use of precautionary credit lines? Can we bring
forward short-term liquidity provisions? We want countries to
approach the Fund and access the tools they require for the needs they
have. The sooner countries can approach us, obtain necessary financing,
and implement good policy, the better chance we have to contain the
damage and move towards recovery.
- Third, many of our member countries are
faced with rapidly building pressures on debt which they need to address.
On that note, our Board yesterday approved changes in the application of
the Catastrophe Containment and Relief Trust (CCRT) which can provide
some debt relief to our poorest member countries. We are seeking support
from our membership to increase the capacity of the CCRT. We have
received pledges of support from the U.K., Japan and China -and we hope
others will follow quickly.
- Last but not least, we need urgently to
secure the borrowing capacity of the Fund through the NABs (New
Arrangements to Borrow) and bilateral borrowing arrangements. In
this context, it's very encouraging that NAB approval is part of the US
stimulus package that is before the US Congress. We need other countries
which have not yet done so, to follow suit.
So next steps: the IMFC charged us to discuss these
various options further with our Executive Board with a view to having a
concrete package of proposals for IMFC consideration at our Spring Meetings in
a few weeks time. So it's all hands on deck at the IMF and working very hard to
strengthen our crisis response capacity as much as possible.
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