The International Monetary Fund (IMF) on Friday pledged to deploy its $1 trillion financial capacity to help its member countries recover from the economic devastation caused by the coronavirus pandemic.
In a joint statement with its Financial Committee Chair, Lesetja Kganyago, the Managing Director of the Fund, Kristalina Georgieva, said coronavirus, which began as a “global health pandemic, has turned into an economic and financial crisis.”
“We are in an unprecedented situation where a global health pandemic has turned into an economic and financial crisis.
“With a sudden stop in economic activity, global output will contract in 2020.”
Although the fund said the resultant economic crisis has compelled member countries to take extraordinary actions to save lives and safeguard economic activity, more is still needed.
In the face of the crisis, the IMF said priority should be given to targeted fiscal support to vulnerable households and businesses to accelerate and strengthen the recovery of their economies by 2021.
The greatest health impact so far, the group noted, has been in advanced economies.
However, it said emerging market and developing countries, especially low-income countries like Nigeria, would be particularly hard hit by a combination of a health crisis, a sudden reversal of capital flows and a sharp drop in commodity prices.
“Many of these countries need help to strengthen their crisis response and restore jobs and growth, given foreign exchange liquidity shortages in emerging market economies and high debt burdens in many low-income countries.
“Strong and coordinated policy actions, including at the multilateral level, are key to effectively resolve this global crisis,” the group said.
It said it welcomed the IMF’s efforts to support an exceptionally high number of countries requiring IMF emergency financing at the same time, as well as its close cooperation with other international financial institutions, especially the World Bank Group.
“The IMF stands ready to use its $1 trillion financial capacity to support its member countries,” the IMF Managing Director, Mrs Georgieva, assured.
The IMF said it has already taken action to provide relief for debt repayments for its poorest members under the Catastrophe Containment and Relief Trust.
The Trust, Mrs Georgieva said, was being called upon to strengthen its crisis response by enhancing access to its emergency facilities under the Rapid Credit Facility and Rapid Financing Instrument.
Going beyond its traditional lending facilities, the IMF said it would explore additional options to help members that experience foreign exchange shortages.
The Managing Director said the IMF’s Executive Board would be discussing issues to be brought under the package of measures for the finance committee’s consideration at the Spring Meetings.
“Our common goal is to make the IMF’s crisis response even more effective in helping its members achieve a faster and stronger recovery,” the IMF said.