## Restoring Sustainable Flows of Capital and Robust Financing for Development

_IMF News, July 8, 2020_

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## Bibliographic details
- Authors: Kristalina Georgieva
- Published: July 8, 2020

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### Overview
- Speech by Kristalina Georgieva, IMF Managing Director.
- High-level conference, organized by the Paris Forum and the Saudi G20 Presidency.
- Date: July 8, 2020.
- Key projection: From the start of the crisis until the end of 2021, the world economy is projected to face a cumulative loss of more than $12 trillion—equivalent to the combined annual output of Japan, Germany, Italy, and Spain.
- Current state: Three-quarters of economies reopening, although gradually and with some necessary reversals; projection of only a partial recovery in 2021.

### The economic shock — granularity and market access
- Global policy response:
  - Fiscal measures amounting to nearly $11 trillion globally.
  - Central banks providing massive liquidity.
- Emerging market capital market access:
  - In the first six months of this year, emerging market governments issued $124 billion in hard currency debt—two-thirds of that came between April and June, after the stop in debt issuance in March.
- Uneven impact and vulnerable countries:
  - No market-access or unaffordable access for emerging markets with weak fundamentals, especially those with high debt levels, dependence on hard-hit sectors, or affected by conflict.
  - Regions explicitly noted: Sub-Saharan Africa, Latin America, the Middle East.
  - Special concern: Sub-Saharan Africa was on the move before the crisis; now faces a tough situation but should not lose the chance of continuing its transformation.

### Supporting the most affected countries — IMF actions and proposals
- IMF operational response:
  - Provided 72 financial lifelines in less than three months.
  - Total exposure of $250 billion, with more than one-third of that committed in these three months.
  - Received strong support for:
    - A doubling of access to emergency facilities.
    - A tripling of concessional financing capacity.
- Priority actions and proposals:
  - Tune up instruments further for low-income countries and tourism-dependent small island economies.
  - Engage membership to use SDRs of advanced economies to help highly vulnerable countries (described as relatively low-cost for advanced economies and high-impact for countries in need).
  - Continue focus on countries with high debt levels; prepare for next steps after the Debt Service Suspension Initiative (DSSI), including country-by-country debt restructuring for those who cannot stay afloat without determined action.
  - Promote creditor–debtor cooperation that is rational and mutually respectful; IMF and World Bank to promote debt transparency and prudent debt restructuring.
- Specific country mention:
  - Argentina: critical that the country and the creditors come together.

### Building greater resilience — priorities and policy recommendations
- Framing: Expand the concept of resilience beyond banking-sector strengthening to a broader "new religion of the IMF" with three dimensions:
  1. Fiscal accountability and digital transformation
     - Governments expanding fiscal support must remain fully accountable to the taxpayer: "spend but keep the receipts."
     - Use digital transformation to move governments to e-platforms to ensure efficient and transparent public spending, cut red tape, and help private businesses flourish.
  2. Environmental sustainability
     - Policies must be environmentally sustainable.
     - Support low-carbon and climate-resilient growth and be smart about allocating additional public spending.
  3. Investing in people
     - Invest in education, health, social protection.
     - Prevent sharp increases in inequality that this crisis could produce.
- End goal: If opportunities are seized, emerge with a global economy that is more resilient, more efficient, more inclusive, and more sustainable.

*Restoring Sustainable Flows of Capital and Robust Financing for Development — Kristalina Georgieva (Speech, July 8, 2020).*

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## References

- [https://www.imf.org/en/about/senior-officials/bios/kristalina-georgieva](https://www.imf.org/en/about/senior-officials/bios/kristalina-georgieva)
- [Argentina and the IMF](http://www.imf.org/external/country/ARG/index.htm)
- [Germany and the IMF](http://www.imf.org/external/country/DEU/index.htm)
- [Italy and the IMF](http://www.imf.org/external/country/ITA/index.htm)
- [Japan and the IMF](http://www.imf.org/external/country/JPN/index.htm)
- [Spain and the IMF](http://www.imf.org/external/country/ESP/index.htm)
- [IMF-World Bank Debt Sustainability Framework for Low-Income Countries -- A Factsheet](https://www.imf.org/en/about/factsheets/sheets/2023/imf-world-bank-debt-sustainability-framework-for-low-income-countries)
- [Speeches](https://www.imf.org/en/news/searchnews)
- [PRESS CENTER](http://presscenter.imf.org/)
- [https://www.imf.org/en/home](https://www.imf.org/en/home)

_Source: https://www.imf.org/en/news/articles/2020/07/09/sp070820-restoring-sustainable-flows-of-capital-and-robust-financing-for-development_