Fostering a Fair Recovery

IMF News, April 7, 2021

Source details

Event: Opening Remarks for the Spring Meetings Press Conference by Kristalina Georgieva, IMF Managing Director, Washington, DC, April 7, 2021.
Global growth forecasts:
- 6 percent for this year.
- 4.4 percent in 2022.
Recovery context:
- Recovery underway after the worst global recession since the second world war.
- Exceptional and coordinated fiscal and monetary actions limited the contraction; without these measures the global contraction last year would have been three times worse.
- The outlook is brighter due to vaccine distribution and further policy support, especially in the United States.
Risks and uncertainties:
- Economic fortunes are diverging; a small number of advanced and emerging market economies, led by the U.S. and China, are powering ahead while weaker and poorer countries lag.
- High uncertainty from new virus strains and potential shifts in financial conditions.
- Risk of long-term scarring from job losses, learning losses, bankruptcies, extreme poverty and hunger.

1. First, a fair shot at the vaccine.

Ramp up vaccine production and distribution and steer clear of export controls.
Fully fund the COVAX facility and ensure surplus vaccines are transferred to poorer countries.
Economic benefit: Faster progress in ending the health crisis could add almost $9 trillion to global GDP by 2025.
Urgency: The window of opportunity for rapid global vaccination is closing fast.

2. Second, a fair shot at recovery.

Support vulnerable households and viable firms while the crisis persists via targeted fiscal measures and maintaining favorable financial conditions.
Require careful communication by major central banks and prudent policies in emerging and developing countries to minimize harmful financial spillovers.
After the health crisis: gradually scale back broad support programs and scale up targeted hiring subsidies, retraining and reskilling—especially for low-skilled workers, youth and women.
Support viable small businesses through equity injections and better restructuring procedures.
Once recovery is firmly underway, ground fiscal policy in credible medium-term frameworks.

3. Third, a fair shot at the future.

Scale up public investment in green projects, digital infrastructure, health and education to ensure inclusive benefits from the transformation to greener, smarter economies.
Mobilize sufficient public revenues and more efficient spending; in many cases this entails more progressive taxation and agreements on minimum taxation for companies and international tax rights.
Couple domestic reforms with stronger support for poorer countries to fight the crisis and invest in the future.

Financing needs and instruments:
- Low-income countries have to deploy some $450 billion over the next five years.
- Needs include more domestic revenue mobilization, more external concessional financing, and more help to deal with debt.
- Further extension of the Debt Service Suspension Initiative (just announced by the G20) and the new Common Framework for orderly debt restructuring will help.

Operational support and scale-up:
- So far, the IMF has supported 86 countries with over $110 billion, using a variety of instruments.
- IMF lending to Sub-Saharan Africa last year was 13 times more than the annual average over the previous decade.
- The IMF has supported 160 countries through technical assistance and training.
- The IMF has supported 29 of its poorest members through debt service relief that has recently been extended.
SDRs and liquidity:
- As indicated by the G20, the IMF will propose a new SDR allocation of $650 billion to address long-term global need for reserve assets and provide a substantial liquidity boost to members, especially the most vulnerable.
Strategic message:
- The crisis underscores shared global destiny and common responsibility to foster a fair recovery and build a resilient post-pandemic world.

Source: Opening Remarks for the Spring Meetings Press Conference by Kristalina Georgieva, IMF Managing Director, April 7, 2021.