How the IMF Can Help Countries Address the Economic Impact of Coronavirus

March 9, 2020

The International Monetary Fund stands ready to provide assistance to member countries facing immediate financing needs arising from public health disasters. 

A global health crisis, such as the coronavirus, inevitably can have an adverse economic impact, and it is part of the IMF’s mandate to assist countries through policy advice and lending.

The institution is working closely with its development partners—World Bank, World Health Organization, and Asian Development Bank—and other health officials to provide timely policy advice, technical assistance, and financial support.

The IMF has the following facilities and instruments in its toolkit to help countries respond to the economic impact of the coronavirus.

Emergency financing. The Rapid Credit Facility (RCF) and Rapid Financing Instrument (RFI) provide emergency financial assistance to member countries without the need to have a full-fledged program in place. These loans—which could amount up to $50 billion for low-income and emerging markets—can be disbursed very quickly to assist member countries implement policies to address emergencies such as the coronavirus. Emergency lending to low-income countries available under the RCF is about $10 billion, and for emerging markets under the RFI it could amount to about $40 billion. In 2016, the IMF provided an RFI emergency loan to Ecuador after one of the strongest earthquakes in decades.

Augmenting existing lending programs. The IMF can modify as needed existing programs in support of countries to accommodate urgent new needs arising from the coronavirus. The IMF was the first international financial institution to swiftly provide additional financing for Guinea, Liberia, and Sierra Leone in 2014 to fight the Ebola outbreak. The IMF’s response helped these countries make room in their budgets for critical health spending, and served as a catalyst for donors, whose assistance was largely directed at health spending.

Grants for debt relief. The Catastrophe Containment and Relief Trust (CCRT) allows the IMF to provide grants for debt relief to the poorest and most vulnerable countries with outstanding obligations to the IMF to help address disasters, including public health disasters. This facility was used to support Guinea, Liberia, and Sierra Leone during the 2014 Ebola outbreak. The CCRT is currently underfunded with just over $200 million available against possible needs of over $1 billion. 

New financing arrangement. The IMF can also provide support through a new financing arrangement under its existing facilities such as Stand-By Arrangements, although some of the tools listed above would generally be preferable, including because they can be disbursed quickly to address the urgent financial need.

The IMF will continue to support vulnerable countries through capacity development. Given the need to quickly redirect public resources, the IMF will remain closely engaged with the affected member countries and development partners, working as needed to reprioritize capacity development activities.