Opening Remarks at a Press Briefing by Kristalina Georgieva following a Conference Call of the International Monetary and Financial Committee (IMFC)

IMF News, March 27, 2020

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Opening Remarks at a Press Briefing by Kristalina Georgieva following a Conference Call of the International Monetary and Financial Committee (IMFC)

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Bibliographic details

• Published: March 27, 2020

Global situation and economic outlook

• The IMFC represents our 189 member countries.
• The world has entered a recession “as bad as or worse than in 2009.”
• Recovery is projected in 2021, potentially a “sizeable rebound,” conditional on:
  • containing the virus everywhere, and
  • preventing liquidity problems from becoming a solvency issue.
• Key risk: a long-lasting impact from the sudden stop of the world economy leading to a wave of bankruptcies and layoffs that can undermine recovery and “erode the fabric of our societies.”

Fiscal and policy responses observed

• Many countries have taken far-reaching measures on both the monetary and fiscal side to address the health crisis and cushion its economic impact.
• G20 reported fiscal measures totaling some 5 trillion dollars or over 6 % of global GDP.
• The IMF launched a policy actions tracker for 186 countries to show “who is doing what,” with regular updates and country-specific analysis under IMF surveillance.

IMF demand, operations, and emergency financing

• Extraordinary spike in requests for IMF emergency financing: some 80 countries have placed requests and more are likely to come.
• Normally, the IMF “never have more than a handful of requests at the same time.”
• The Executive Board approved the first of these emergency requests for the Kyrgyz Republic, described as “a record fast disbursement.”

Emerging markets and financing needs

• Emerging markets face a wide range of problems: spread of the virus, shut-down of economies, capital outflows, and for commodity exporters — a price shock.
• Many emerging markets will experience contraction due to containment measures and reduced global demand for exports (tourism, commodities, manufactured goods) that provide critical streams of foreign exchange.
• Current IMF 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.

IMF proposals and institutional responses

• Members are asking the IMF to “do more, do it better, and do it faster” and to collaborate with the World Bank and other partners.
• Specific proposals described:
  • Double emergency financing capacity; simplify processes; and fill the gap in concessional financing.
  • Review lending instruments to identify gaps in the context of this crisis and design appropriate responses:
  • Consider expanding the use of precautionary credit lines.
  • Consider bringing forward short-term liquidity provisions.
  • Encourage countries to approach the Fund to access tools suited to their needs as soon as possible.
  • Address rapidly building debt pressures for many member countries:
  • Board approved changes in the application of the Catastrophe Containment and Relief Trust (CCRT) to provide some debt relief to poorest members.
  • IMF is seeking support from membership to increase CCRT capacity; pledges of support have been received from the U.K., Japan and China, with hope others will follow quickly.
  • Urgently secure the Fund’s borrowing capacity through the NABs (New Arrangements to Borrow) and bilateral borrowing arrangements.
  • NAB approval is part of the US stimulus package that is before the US Congress; other countries are urged to follow suit.

Next steps and governance

• The IMFC charged the IMF to discuss these options further with the Executive Board with a view to presenting “a concrete package of proposals” for IMFC consideration at the Spring Meetings in a few weeks’ time.
• IMF staff and management are working to “strengthen our crisis response capacity as much as possible.”

Opening Remarks at a Press Briefing by Kristalina Georgieva following a Conference Call of the International Monetary and Financial Committee (IMFC), March 27, 2020.

References

• https://www.imf.org/en/about/senior-officials/bios/kristalina-georgieva
• Joint Statement by the Chair of International Monetary and Financial Committee and the Managing Director of the International Monetary Fund, March 27, 2020
• https://www.imf.org/en/topics/imf-and-covid19
• The IMF and COVID-19 (Coronavirus)
• Kyrgyz Republic and the IMF
• Speeches
• PRESS CENTER
• https://www.imf.org/en/home