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IMF Executive Board Approves Immediate Debt Relief for 25 Countries
Washington, DC – Ms. Kristalina Georgieva, Managing Director of the International Monetary Fund (IMF) issued the following statement:
“Today, I am pleased to say that our Executive Board approved immediate debt service relief to 25 of the IMF’s member countries under the IMF’s revamped Catastrophe Containment and Relief Trust (CCRT) as part of the Fund’s response to help address the impact of the COVID-19 pandemic.
“This provides grants to our poorest and most vulnerable members to cover their IMF debt obligations for an initial phase over the next six months and will help them channel more of their scarce financial resources towards vital emergency medical and other relief efforts.
“The CCRT can currently provide about US$500 million in grant-based debt service relief, including the recent US$185 million pledge by the U.K. and US$100 million provided by Japan as immediately available resources. Others, including China and the Netherlands, are also stepping forward with important contributions. I urge other donors to help us replenish the Trust’s resources and boost further our ability to provide additional debt service relief for a full two years to our poorest member countries.”
The countries that will receive debt service relief today are: Afghanistan, Benin, Burkina Faso, Central African Republic, Chad, Comoros, Congo, D.R., The Gambia, Guinea, Guinea-Bissau, Haiti, Liberia, Madagascar, Malawi, Mali, Mozambique, Nepal, Niger, Rwanda, São Tomé and Príncipe, Sierra Leone, Solomon Islands, Tajikistan, Togo, and Yemen.
Source: IMF Executive Board Approves Immediate Debt Relief for 25 Countries
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IMF says 'worst recession since Great Depression' is likely
The International Monetary Fund (IMF) did not mince words on Tuesday about its dire outlook for a coronavirus-ravaged world economy.
"It is very likely that this year the global economy will experience its worst recession since the Great Depression, surpassing that seen during the financial crisis a decade ago," IMF Chief Economist Gita Gopinath wrote in the foreward for the fund's World Economic Outlook.
Titled "The Great Lockdown", the IMF's latest report card on the global economy described the coronavirus pandemic as a crisis "like no other" and predicted that world economic output will shrink by 3 percent this year, before experiencing a partial rebound next year.
But there was plenty of hedging to go along with that hard number.
"There is extreme uncertainty around the global growth forecast. The economic fallout depends on factors that interact in ways that are hard to predict," the Fund warned, citing the pathway of the pandemic, the efficacy of containment measures, the intensity of supply chain disruptions, credit market freezes, commodity price impacts and changes in consumer behaviour.
Under the Fund's best-case scenario, the world is likely to lose a cumulative $9 trillion in output over two years - greater than the combined GDP of Germany and Japan, said Gopinath.
The IMF's forecasts assume that outbreaks of the novel coronavirus will peak in most countries during the second quarter and fade in the second half of the year, with business closures and other containment measures gradually unwound.
A longer pandemic that lasts through the third quarter could cause a further 3 percent contraction in 2020 and a slower recovery in 2021, due to the "scarring" effects of bankruptcies and prolonged unemployment. A second outbreak in 2021 that forces more shutdowns could cause a reduction of 5 to 8 percentage points in the global gross domestic product baseline forecast for next year, keeping the world in recession for a second straight year.
The new forecasts provide a somber backdrop to the IMF and World Bank spring meetings, which are being held by videoconference this week to avoid contributing to the spread of the virus. The meetings normally draw 10,000 people to a crowded two-block area of downtown Washington.
IMF Managing Director Kristalina Georgieva said last week that some $8 trillion in fiscal stimulus being poured in by governments to stave off collapse was not likely to be enough. She is expected to argue this week for more debt relief for the poorest countries.
Advanced economies hit hard
The global economy contracted 0.7 percent in 2009 - previously the worst downturn since the 1930s - according to IMF data.
Advanced economies now suffering the worst outbreaks of the virus will bear the brunt of the plunge in activity. The US economy will contract 5.9 percent in 2020, with a rebound to 4.7 percent growth in 2021 under the Fund's best-case scenario.
Euro zone economies will contract by 7.5 percent in 2020, with hard-hit Italy seeing its GDP fall 9.1 percent and contractions of 8.0 percent in Spain, 7.0 percent in Germany and 7.2 percent in France, the Fund said. It predicted euro-area economies as a whole would match US growth of 4.7 percent in 2021.
China, where the coronavirus outbreak peaked in the first quarter and business activity is resuming with the help of large fiscal and monetary stimulus, will maintain positive growth of 1.2 percent in 2020. China's economy is forecast to grow 9.2 percent in 2021, the IMF said.
India's 2020 fiscal-year growth also is expected to stay in positive territory, but Latin American economies, which are still experiencing growing coronavirus outbreaks, will see a contraction of 5.2 percent.
The Fund called for central bank liquidity swap lines to be extended to more emerging market countries, which face a double problem of locked-down activity and tightening financial conditions caused by a massive outflow of funds to save-haven assets such as US Treasuries.
It said some countries may need to turn to temporary limits on capital outflows.
