Managing Director’s Speaking Points at 2020 Spring Meetings IMFC Plenary
IMF News, April 16, 2020
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- Published: April 16, 2020
Opening
- As prepared for delivery. Opening line: "Thank you, Governor. Good morning."
- Framing: "We meet during exceptional times. And exceptional times call for exceptional action."
- Emphasis on global cooperation: "More than ever, we must work together to respond to this unprecedented crisis and prepare for recovery."
Outlook
- Characterization of the crisis:
- "More complex, with interlinked shocks to our health and our economies that have brought our way of life to a complete stop;"
- "More uncertain, as we are learning only gradually how to treat the novel virus, make containment most effective, and restart our economies;"
- "Truly global. Pandemics don’t respect borders, neither does the economic shock they cause."
- Projections and scope:
- "We expect global economic activity to decline on a scale we have not seen since the Great Depression."
- "This year 170 countries will see income per capita go down – only months ago we were projecting 160 economies to register positive per capita income growth."
- Institutional response required: "This is an unprecedented crisis that calls for a comprehensive approach by our institution."
Actions Taken
- Strengthening IMF lending capacity:
- "Thanks to your wise actions to strengthen the financial capacity of the IMF with the New Arrangements to Borrow and the Bilateral Borrowing Arrangements, we have $1 trillion lending capacity – 4 times more than at the outset of the Global Financial Crisis."
- Surveillance and analysis:
- Combined "macroeconomic policy analysis with epidemiological modelling to disentangle the path of the virus and its impact on health and economic systems."
- Early guidance on severity of the downturn; added scenario analysis to reflect unusual uncertainty.
- Monitoring and policy advice:
- Tracked policy actions across "193 economies" to develop policy advice and share good practices aimed at slowing the outbreak, protecting people and jobs, and safeguarding macro-financial stability.
- Rapid lending and demand:
- "We doubled annual access limits for our rapid disbursing vehicles."
- "More than 100 countries have approached us for emergency financing, and the Board will have considered about half of these requests by the end of the month."
- Coordination with other institutions:
- Working "with the World Bank and other international financial institutions" to maximize collective impact and support targeted use of resources with good governance.
- Capacity development:
- "Over 90 countries have already benefited from our capacity development, which has been closely integrated with our policy advice."
- Debt relief and creditor coordination:
- "We revamped the Catastrophe Containment and Relief Trust to help 29 of our poorest and most vulnerable members through rapid debt service relief."
- Welcome G20 leadership on agreement "on official bilateral creditors to suspend debt service obligations" and call for private sector creditors to participate on comparable terms.
- Convening and collaboration example:
- Co-hosting with the World Bank a high-level "Mobilization with Africa" event.
Preventing a Protracted Recession
- Strategic orientation: "We need to think hard about where this crisis is headed and how we can be ready to help our members, being mindful of both risks and opportunities."
- Concerns for emerging markets and developing countries:
- "They have experienced the sharpest portfolio flow reversal on record of about 100 billion dollars."
- Commodity-dependent countries hit by plummeting export prices; tourism-dependent countries experiencing collapse of revenues; remittance-reliant countries affected.
- Liquidity and lending responses:
- For some countries: temporary liquidity pressures; Fund established a new "Short-term Liquidity Line."
- For emerging economies: engage through regular facilities, including precautionary mechanisms; may require considerable resources if further market pressures arise.
- Prepare to deploy "our full lending capacity" and mobilize "all layers of the global financial safety net."
- Support for poorest members:
- Objective: "We aim to triple our concessional lending and are urgently seeking 17 billion dollars in new loan resources for the Poverty Reduction and Growth Trust."
- "We will also likely need at least 1.8 billion dollars in subsidy resources."
- Consideration of how use of SDRs could be more helpful.
- Debt sustainability and alternative approaches:
- Recognition that "more lending may not always be the best solution" given high debt burdens.
- Need to "contemplate new approaches, working closely with other international institutions and fora, as well as the private sector" and consider "extraordinary measures" temporarily in this unprecedented crisis.
Preparing for Recovery
- Policy advice adaptation:
- By October Annual Meetings, need "a better understanding of the challenges, risks and tradeoffs facing our membership as they gradually restart their economies."
- Key policy questions to address:
- How long to maintain extraordinary stimulus and unconventional policy measures, and how to unwind them.
- Dealing with high unemployment and ever "lower-for-longer" interest rates.
- Preserving financial stability; facilitating sectoral adjustment and private sector debt workouts where needed.
- Broader structural priorities:
- Reignite trade as an engine for growth.
- "Sharing the benefits of fintech and digital transformation which have demonstrated their usefulness during this crisis."
- Combat climate change where stimulus to reinforce the recovery could advance a green economy.
- Social cohesion and inclusion:
- Support countries in calibrating social policies to "reduce inequality, protect vulnerable people, and promote access to opportunities for all."
Final Remarks
- Uncertainty acknowledged: "There is much uncertainty about the shape of our future."
- Opportunity and collective action: "But we can and we must embrace this crisis also as an opportunity to craft this future together."
- Institutional confidence: "As we discussed at the last Annual Meetings, we have successfully worked together through more than 75 years of transitions. We have overcome numerous challenges and we will do so again."
- Closing: "Thank you."
Managing Director’s Speaking Points at 2020 Spring Meetings IMFC Plenary — April 16, 2020