IMF chief calls for additional financial incentives to limit damage from coronavirus
Kristalina Georgieva, managing director of the International Monetary Fund, on Monday urged governments to take additional fiscal stimulus measures and maintain close contact with each other to prevent long-term economic damage from the coronavirus.
She said the IMF stands ready to mobilize its $ 1 trillion lending capacity to assist all of its 189 member countries..
«As the virus spreads, the case for a coordinated and synchronized global financial stimulus grows stronger by the hour», – said Georgieva.
«As a first line of defense, the Fund can deploy its flexible and rapidly evolving emergency response toolkit to help countries with urgent balance of payments needs», – by Kristalina Georgieva.
«The Fund already has 40 ongoing agreements – both expenditure and preventative – with total commitments of about $ 200 billion.», – she added. «In many cases, these arrangements can be another means of quickly spending funds to finance crises.».
In addition, the IMF special fund for the prevention and elimination of consequences of disasters (The Catastrophe Containment and Relief Trust, CCR) «can help the poorest countries get immediate debt relief, freeing up vital resources for health spending, containment and mitigation», – writes Georgieva.
The head of the IMF suggested that coordinated fiscal action in the context of the 2008-2009 financial crisis may be necessary in the current situation. She said that in 2009 alone, the G20 countries spent about 2% of their GDP on stimulus measures, or about $ 900 billion today., «so there is still a lot of work to be done».
On monetary policy, she said central banks «must continue to support demand and build confidence by weakening financial conditions and allowing credit to flow into the real economy», citing the Fed’s emergency action on Sunday as an example.
She welcomed the opening of swap lines between major central banks and said such swap lines may need to be extended to emerging market economies in the future..
She said policy action by central banks will need to focus on tackling the difficult challenge of capital flight from emerging markets and the commodity price crisis, citing a recent record $ 42 billion outflow, according to the data. Institute of International Finance, published last week.
Georgieva said banks should be encouraged to use their capitals and liquidity buffers, encourage banks to renegotiate lending terms for problem borrowers.
Earlier this month, the IMF announced that it will provide about $ 50 billion to developing countries through various emergency financing programs..
In addition, the UK contributed $ 195 million to the Disaster Relief and Disaster Relief Fund, bringing about $ 400 billion in debt relief..
All fiscal, monetary and regulatory actions will be «most effective if they are carried out together», she said, adding that IMF research shows spending increases have a multiplier effect when countries work together.
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