## Development Committee Plenary Meeting

_IMF News, October 16, 2020_

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**Canonical URL:** [Development Committee Plenary Meeting](https://www.imf.org/en/news/articles/2020/10/16/development-committee-plenary-meeting-speaking-points-for-the-managing-director)

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## Bibliographic details
- Published: October 16, 2020

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### Global economic outlook
- The Covid-19 pandemic and containment measures triggered a sharp downturn in the first half of this year.
- Activity has begun to recover, supported by large-scale easing of fiscal and monetary policies in many advanced and emerging economies and the widespread adoption of health measures.
- Manufacturing drives the recovery, while contact dependent services are lagging.
- The virus continues to spread in many parts of the world; several countries have slowed reopening and some have reinstated partial lockdowns.
- Global activity forecasts:
  - Global activity is expected to contract by 4.4 percent in 2020–the sharpest decline since the Great Depression.
  - A recovery of 5.2 percent is expected in 2021—but even with this, the world economy would remain well below its pre-crisis growth path.
- Inflation is expected to remain subdued, as weak demand outweighs the impact of supply chain disruptions on prices.
- Exceptional uncertainty around the outlook driven by:
  - spread and infectiousness of the virus,
  - the public health response,
  - extent of global spillovers,
  - financial market sentiment,
  - persistence of supply chain disruptions.
- Distributional divergence: parts of the economy (notably the digital economy and tech sector) are doing well, while others face protracted or permanent decline.

### Emerging market and developing economies (EMDEs) and low-income developing countries (LIDCs)
- EMDEs face continuing virus outbreaks alongside weak external demand, tourism, remittances and capital inflows; low oil prices hurt oil exporters.
- EMDE forecast:
  - For EMDEs as a group, GDP is forecast to contract by 3.3 percent this year.
- China and some other East Asian economies are expected to perform better, reflecting resilient exports, strong policy support, and success with controlling the virus.
- Near-term outlook is grim in much of Latin America, the Middle East, Sub Saharan Africa, and South Asia.
- LIDCs are especially vulnerable:
  - Weak healthcare capacity leaves populations highly exposed to the pandemic.
  - Many governments in LIDCs can mobilize only limited fiscal resources to support their economies.
  - Risks include reversal of development gains, millions pushed back into poverty, loss of access to education (with girls likely most severely affected), and accumulation of high levels of public debt.

### Policy priorities and recommendations
- First: avoid premature withdrawal of support for the economy to prevent tremendous damage.
  - Fiscal support deployed so far:
    - Advanced economies: 20 percent of GDP
    - Emerging market economies: 6 percent of GDP
    - Low-income countries: 2 percent of GDP
  - To help developing countries maintain support, international institutions will have to "lean forward."
- Second: gradually redirect public support to underpin structural change toward a more equitable, knowledge-, digital- and green-focused post-pandemic economy.
  - Emphasize job-rich investments (e.g., infrastructure rehabilitation in advanced economies, new infrastructure in emerging markets and developing countries).
  - Pair investments with training and skills to ensure a just transition.
- Third: deal with pre-existing conditions (fiscal buffers, effective institutions, transparent governance, quality of spending).
  - Support efforts to enhance international architecture for resolving sovereign debt problems.
  - Welcome the G20 debt service suspension initiative and the Common Framework for Sovereign Debt Resolution.
  - Continue to work with the World Bank on a case-by-case basis to support debt restructuring where necessary.
  - Give attention to governance, domestic revenues, quality of spending, transparency and accountability.
- Health and trade:
  - Guarantee access to essential health supplies.
  - Keep borders open for trade.
  - Ensure vaccines and treatments are available to all when discovered.
  - Note: World Bank announced $12 billion to help developing countries finance purchase and distribution of vaccines, tests, and treatments.

### IMF response and actions
- Lending and financial support:
  - As of October 2, 2020, 81 countries have received support from IMF lending facilities totaling over $100 billion.
  - 42 of these countries are LIDCs.
  - Temporarily doubled the limits on access to emergency facilities.
  - Increased annual access to both regular and concessional financing facilities.
  - Received assistance from members to boost the loan resources of the Poverty Reduction and Growth Trust Fund (PRGT), allowing sharp expansion of concessional lending since the start of the pandemic.
  - Additional resources will be needed to strengthen support to low-income countries going forward.
- Debt relief and debt work:
  - Provided debt service relief to poorest members through the Catastrophe Containment and Relief Trust (CCRT), enabled by grant support from several members.
  - Advancing work on a broad debt agenda, including reviewing international architecture for resolving debt to private creditors and assessing the role of state-contingent instruments in sovereign debt restructurings.
- Surveillance and capacity development:
  - Resuming targeted bilateral surveillance through Article IV consultations after a temporary suspension.
  - Assessing improvements to IMF surveillance of national economies and financial sectors.
  - Integrating issues such as inequality and gender equity, corruption, and tackling climate change into Article IV consultations.
  - Launching a COVID-19 Crisis Capacity Development Initiative to deliver concrete technical advice to help members overcome the crisis faster.
  - Acknowledgement of contributions to capacity development from Japan, Germany, and Switzerland.

*Speaking Points for the Managing Director, Development Committee Plenary Meeting — Washington, D.C., October 16, 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)
- [The Managing Director's Written Statement October 2020](https://www.imf.org/en/publications/policy-papers/issues/2020/10/16/development-committee-the-managing-director-s-written-statement-october-2020-49821)
- [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/2020/10/16/development-committee-plenary-meeting-speaking-points-for-the-managing-director_