IMF Makes Available $50 Billion to Help Address Coronavirus

IMF News, March 4, 2020

Source details

The IMF is making available about $50 billion through its rapid-disbursing emergency financing facilities for low income and emerging market countries that could potentially seek support.
Of this, $10 billion is available at zero interest for the poorest members through the Rapid Credit Facility.
Remarks delivered by IMF Managing Director Kristalina Georgieva at a joint press conference with World Bank Group President David Malpass; opening remarks were prepared for delivery.

The disease is spreading quickly and, with over one-third of IMF membership affected directly, this is a global problem.
The outbreak will eventually retreat, but the timing is unknown.
The shock affects both supply and demand:
- Supply will be disrupted due to morbidity and mortality, containment efforts restricting mobility, higher costs of doing business from restricted supply chains, and a tightening of credit.
- Demand will fall due to higher uncertainty, increased precautionary behavior, containment efforts, and rising financial costs that reduce the ability to spend.
Spillovers will occur across borders.
Experience suggests:
- about one-third of economic losses from the disease will be direct costs: from loss of life, workplace closures, and quarantines.
- the remaining two-thirds will be indirect, reflecting retrenchment in consumer confidence and business behavior and a tightening in financial markets.
Financial systems are more resilient than before the Global Financial Crisis, but uncertainty is the biggest near-term challenge.
Under any scenario, global growth in 2020 will drop below last year’s level; the magnitude and duration depend on the epidemic and policy responses.
Countries with weaker health systems and response capacity are particularly challenged, underscoring the need for global coordination to accelerate recovery of demand and supply.

Fiscal priority:
- Ensure front-line health-related spending to protect people’s wellbeing, care for the sick, and slow virus spread.
- Urgent need to step up health-related measures and ensure production of medical supplies to meet demand.
Macro-financial policy:
- Implement “no regret” actions that are timely and targeted to sectors, businesses, and households hardest hit to shorten and soften economic impact.
- If a generalized weakening in demand occurs (via confidence and spillover channels including trade and tourism, commodity prices, and tighter financial conditions), provide additional policy support to demand and ensure adequate supply of credit.
Liquidity:
- Provide adequate liquidity to offset financial stability risks.
Coordination:
- Stand ready to provide a more forceful, coordinated response if conditions require it.
- G7 statement welcomed for readiness to cooperate on timely and effective measures.

The IMF is ready to help its membership, with attention to members at risk: those with weak health systems, inadequate policy space, commodity exporters vulnerable to terms-of-trade shocks, and economies susceptible to spillovers.
Particular concern for low-income and more vulnerable members, where financing needs could rise rapidly.
Staff are identifying vulnerable countries and estimating potential financing needs should the situation deteriorate.
Available IMF resources and facilities:
- about $1 trillion in overall lending capacity.
- For low-income countries: rapid-disbursing emergency financing of up to $10 billion (50 percent of quota of eligible members) accessible without a full-fledged IMF program.
- For other members: the Rapid Financing Instrument could provide about $40 billion for emerging markets that could potentially approach the IMF for financial support.
- Catastrophe Containment and Relief Trust (CCRT) provides eligible countries with up-front grants for relief on IMF debt service falling due; CCRT currently underfunded with just over $200 million available against possible needs of over $1 billion.
- Call to member countries to help ensure the CCRT is fully re-charged and ready for the crisis.
United message:
- The Fund is fully committed to supporting member countries, particularly the most vulnerable.
- The Fund has the tools to help.
- The Fund is coordinating closely with partner institutions.

about $50 billion
$10 billion (zero interest for poorest members through the Rapid Credit Facility)
189 member states
over one-third
one-third (direct economic losses)
two-thirds (indirect economic losses)
global growth in 2020 will drop below last year’s level
about $1 trillion (overall lending capacity)
up to $10 billion (50 percent of quota of eligible members) — rapid-disbursing emergency financing for low-income countries
about $40 billion — Rapid Financing Instrument for emerging markets
just over $200 million available in the CCRT
over $1 billion (possible CCRT needs)

IMF Makes Available $50 Billion to Help Address Coronavirus — March 4, 2020, IMF Communications Department