IMF chief says fallout from virus will be much worse than financial crisis

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The coronavirus pandemic has paralyzed the world economy and plunged the world into a recession that will be “much worse” than the global financial crisis of ten years ago, the head of the International Monetary Fund said on Friday.

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IMF Managing Director Kristalina Georgieva, at a rare joint press conference with the head of the World Health Organization, called on advanced economies to step up their efforts to help emerging markets and developing countries to survive the economic and health impact of the pandemic.

“This is a crisis like no other,” she told some 400 journalists during a video conference. “We have seen the world economy stalled. We are now in a recession. It’s much worse than the global financial crisis ”of 2008-2009.

More than one million people have been infected with COVID-19, the disease caused by the virus, and more than 53,000 have died, a Reuters report said on Friday.

Georgieva said that the IMF was working with the World Bank and WHO to advance their call on China and other official bilateral creditors to suspend debt collection from the poorest countries for at least a year until the pandemic subsides.

She said China is “constructively” committed to the issue, and that the IMF will work on a specific proposal in the coming weeks with the Paris Club of Creditor Nations, the Group of 20 Major Economies and the Bank. global for review at the annual spring meetings, to be held online in approximately two weeks.

Emerging markets and developing economies have been hit hard by the crisis, said Georgieva, noting that nearly $ 90 billion in investments had already flowed from emerging markets, far more than during the financial crisis. Some countries were also suffering from sharp drops in commodity prices.

More than 90 countries – nearly half of the 189 IMF members – have requested emergency funding from the Fund to respond to the pandemic, she said.






© Zach Gibson / AFP / Getty Images

The IMF and WHO have called for emergency aid to be used primarily to strengthen health systems, pay doctors and nurses, and purchase protective equipment.

Georgieva said the fund was ready to use as much of its $ 1 trillion “war chest” in financing capacity as necessary.

The IMF has started to disburse funds for requesting countries, including Rwanda, with requests from two other African countries to be considered on Friday, she said.

“It is, in my lifetime, the darkest hour of humanity – a great threat to the whole world – and it requires us to stand up, to be united and to protect the most vulnerable of our fellow citizens, “she said.

She said central banks and finance ministers had already taken unprecedented steps to mitigate the effects of the pandemic and stabilize markets, but more needed to be done to maintain the flow of cash, especially to Emerging Markets.

To this end, the Fund’s board of directors will be examining in the coming days a proposal to create a new short-term liquidity line to help provide funds to countries in difficulty. She also urged central banks and in particular the US Federal Reserve to continue to offer swap lines to emerging economies.

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