IMF’s Kristalina Georgieva: Beyond the COVID-19 Crisis

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IMF’s Kristalina Georgieva: Beyond the COVID-19 Crisis

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Bibliographic details

• Authors: KRISTALINA GEORGIEVA
• Published: June 1, 2020

Overview

• The world was put into stasis to protect public health: shops closed, factories were mothballed, and people’s freedom of movement was severely curtailed.
• No country has escaped the health, economic, and social impacts of the COVID-19 crisis.
• Tragically, more than 375,000 people have died and millions have been infected.
• The IMF is projecting global economic activity to decline on a scale not seen since the Great Depression.
• The article expresses hope that the crisis can be an opportunity to build a better world.

IMF response and financial support

• Governments have combined dramatic public health interventions with fiscal measures amounting to about $8.7 trillion.
• Central banks have undertaken massive liquidity injections; richer countries have stepped up to support poorer nations.
• The IMF doubled its emergency rapid-disbursing capacity to meet expected demand of about $100 billion.
• By end-May the IMF had approved financing for 60 countries, a record.
• The IMF established a new short-term liquidity line.
• The IMF took steps to triple its concessional funding, targeting $17 billion in new loan resources for the Poverty Reduction and Growth Trust.
• The Catastrophe Containment and Relief Trust was reformed to provide rapid debt-service relief on IMF obligations.
• Working with the World Bank, the IMF catalyzed suspension of official bilateral debt repayments for the poorest countries through the end of 2020.

Governance, accountability, and vulnerabilities

• The IMF emphasized collective commitment and steadfast support while addressing governance vulnerabilities.
• Corruption is highlighted as draining resources away from priorities like public health, social protection, distance learning, and other essential services.
• Distorted spending priorities will undermine recovery and long-term efforts to promote sustainable, inclusive growth or raise productivity and living standards.
• Policy guidance: “do whatever you can, but make sure you keep the receipts.” This entails adopting a range of public financial management, anti-corruption, and anti-money-laundering measures.

Recovery characteristics and challenges

• The recovery will be unusual due to uncertainty about the path of the virus, potential vaccines, and therapeutics.
• Uncertainty could hamper the rebound of investment and consumption, especially if infection rates climb back up as containment measures are eased.
• Countries with stronger macroeconomic fundamentals, social cohesion, and safety nets are likely to experience faster and stronger recoveries.
• Existing vulnerabilities that will hinder the recovery include:
  • high sovereign debt
  • weak corporate, household, and bank balance sheets
  • limited policy credibility
• Governments will face the challenge of phasing out crisis-related policies.
• Global cooperation will be vital to coordinate actions, share data, protect supply chains, and support more vulnerable countries.

A green recovery — reshape economies to be greener, smarter, and fairer

• Greener
  • The pandemic underscores vulnerability to nature and parallels warnings about catastrophic climate change.
  • Opportunity to invest in reducing emissions and adapting to new environmental conditions.
  • Reorient economies to prioritize sustainability and resilience alongside efficiency and profitability.
  • Policies should allocate resources to public goods: clean air, flood defenses, resilient infrastructure, and renewable energy.
  • Lower commodity prices can create fiscal space to phase out regressive fuel subsidies that increase carbon emissions.
  • Investment need stated: in the energy sector, a low-carbon transition could require $2.3 trillion in investment every year for a decade, bringing growth and jobs during the recovery phase.

• Smarter
  • Remote work and technology use have reduced travel, resource consumption, and introduced more agile business processes.
  • Importance of investing in robust digital infrastructure and policy frameworks.
  • The IMF and the World Bank Group launched the Bali Fintech Agenda in 2018 to help countries harness fintech while managing risks.
  • Accelerate work with members to broaden digital transformation so benefits are shared more widely.
  • Well-managed fintech can help end financial exclusion for the 1.7 billion people in developing economies who have no access to banking.

• Fairer
  • IMF research shows lower income inequality is associated with stronger and more sustainable growth.
  • Social disparities have become more pronounced during the Great Lockdown.
  • Informal workers in unregulated sectors or outside the tax system are twice as likely to belong to poor households.
  • These workers typically have no access to sick leave or unemployment benefits; access to health benefits is often precarious.
  • Opportunity to build fairer societies by investing in people: spend more and spend better on schools, training, and reskilling; expand well-targeted social programs; empower women by reducing labor market discrimination.
  • Such investment will need to be funded by more equitable taxation, especially given enhanced public debt levels stemming from the crisis.

Solidarity, IMF role, and next steps

• Examples of solidarity: IMF staff enabling billions of dollars to support vulnerable people, cooking meals for the vulnerable, and caring for sick neighbors.
• The IMF has shown its mettle as an economic first responder during the crisis.
• Commitment: support members through policy advice, financing, and capacity development as the world enters the next phase.
• The collective aim is to take the chance to build a better world.

IMF’s Kristalina Georgieva: Beyond the COVID-19 Crisis - IMF F&D

Content in this bundle

• كلام صريح
  • كلام صريح (Markdown version)
  • كلام صريح (PDF)
• Después de la crisis ● Finanzas y Desarrollo ● Junio de 2020
  • Después de la crisis ● Finanzas y Desarrollo ● Junio de 2020 (Markdown version)
  • Después de la crisis ● Finanzas y Desarrollo ● Junio de 2020 (PDF)
• Beyond the Crisis
  • Beyond the Crisis (Markdown version)
  • Beyond the Crisis (PDF)
• 危机之后 - 《金融与发展》 2020年6月号 - 国际货币基金组织季刊
  • 危机之后 - 《金融与发展》 2020年6月号 - 国际货币基金组织季刊 (Markdown version)
  • 危机之后 - 《金融与发展》 2020年6月号 - 国际货币基金组织季刊 (PDF)