International Monetary Fund (IMF) Managing Director Kristalina Georgieva said Monday that the multilateral lender expects global growth outlook for 2020 to be negative — “a recession at least as bad as during the global financial crisis or worse.”
The IMF chief made the remarks at the Group of Twenty (G20) finance ministers and central bank governors’ conference call on the COVID-19 pandemic, though noting that “we expect recovery in 2021,” according to an IMF statement released following the call.
“To get there, it is paramount to prioritize containment and strengthen health systems — everywhere,” Georgieva said. “The economic impact is and will be severe, but the faster the virus stops, the quicker and stronger the recovery will be.”
The IMF chief expressed strong support for “the extraordinary fiscal actions” many countries have already taken to boost health systems and protect affected workers and firms, and welcomed the moves of major central banks to ease monetary policy.
“These bold efforts are not only in the interest of each country, but of the global economy as a whole,” Georgieva said, adding that “even more will be needed, especially on the fiscal front.”
The IMF managing director noted that advanced economies are generally in a better position to respond to the crisis, but many emerging markets and low-income countries face significant challenges, which are “badly affected” by outward capital flows, with domestic activity to be “severely impacted” as countries respond to the epidemic.
“We are particularly concerned about low-income countries in debt distress — an issue on which we are working closely with the World Bank,” Georgieva said. Also speaking at the conference call, World Bank Group President David Malpass urged G20 countries to help the poorest countries through debt relief, allowing the countries to concentrate their resources on fighting the pandemic.
“The human costs of the coronavirus pandemic are already immeasurable and all countries need to work together to protect people and limit the economic damage,” Georgieva said. “This is a moment for solidarity — which was a major theme of the meeting today.”
To support IMF members, Georgieva said the multilateral lender is concentrating bilateral and multilateral surveillance on this crisis and policy actions to temper its impact, noting that the IMF stands ready to deploy its 1-trillion-dollar lending capacity.
“We will massively step up emergency finance — nearly 80 countries are requesting our help — and we are working closely with the other international financial institutions to provide a strong coordinated response,” she said.
The IMF chief also noted her organization is replenishing the Catastrophe Containment and Relief Trust to help the poorest countries. “We welcome the pledges already made and call on others to join.”
Noting that the IMF is looking at other available options, the managing director said several low- and middle-income countries have asked the multilateral lender to make a Special Drawing Rights allocation, as it did during the global financial crisis. “We are exploring this option with our membership.”
Georgieva also urged members to provide additional swap lines “as a global liquidity crunch takes hold,” adding that the IMF could consider help facilitate a broader network of swap lines, including through an IMF-swap type facility.
“These are extraordinary circumstances. Many countries are already taking unprecedented measures. We at the IMF, working with all our member countries, will do the same,” she said. “Let us stand together through this emergency to support all people across the world.”