IMF Right To Keep Support For Covid, But On Debt Relief It’s Crumbs Larry Elliott | Company


go out there and spend. Don’t worry about building up debt. You will be making a mistake if you remove support from your savings too early. That’s the message from Kristalina Georgieva, the managing director of the International Monetary Fund, to finance ministers as they reflect on how to deal with the economic damage caused by Covid-19.Well, at least some of them. Finance ministers like Rishi Sunak are certainly getting the green light to spend more. This is good advice and must be taken into account, especially since extremely low interest rates mean that debt service costs go down even as borrowing increases.

The IMF is taking a tougher line with countries that may request emergency bailouts. The Argentine government, for example, will find that any help it receives will come with conditions that will certainly be painful and unpopular.

Finally, there are the poorest countries in the world, those that lack the capacity to provide unlimited stimulation to their economies and which in many cases are struggling with levels of non-repayable debt.

Georgieva and World Bank President David Malpass both know that a comprehensive debt relief program is needed for these countries, one involving all bilateral creditors and the private and public sector.

Unfortunately, that will not happen at this year’s IMF annual meeting. All on offer to the 70 or so poorest countries is a six-month extension of the G20 debt suspension plan agreed to in the spring. This does not represent the significant reduction that Malpass talked about. It just represents brushing a few crumbs off the rich man’s table.

Biden and not just coronavirus could upend China’s recovery

For Xi Jinping, there will have been slight satisfaction in seeing the value of the Chinese stock market climb above the previous record of 10.05 billion dollars (8.06 billion pounds sterling). Earlier this year, this other self-proclaimed strongman leader Donald Trump imagined that a record run on Wall Street would propel him to a second term in the White House.

Now, unless he can pull off one of the most notable comebacks of all time, Trump is on his way to a big defeat at the hands of Joe Biden. A pandemic that started in China is going to be a deciding factor in determining the outcome of the US presidential election.

Stock prices have hit high levels in China before, and five years ago they came back to Earth with a bump. They could do it again if Covid-19 causes the global economy to take another deep dive, thus stifling demand for Chinese exports.

But there are reasons why the Chinese stock market is soaring. Beijing was happy to use authoritarian measures to control the pandemic and had no cases in its last daily report to the World Health Organization.

Controlling the virus allowed the economy to recover faster than expected. China’s growth rate, IMF says, will drop from 6.1% to 1.9% this year, but at least it remains positive, which is more than what can be said for the United States. , which are expected to contract by 4.3%.

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Moreover, with Trump apparently on the verge of exiting, investors believe the Cold War between Washington and Beijing will melt away. True, but probably not by much. Biden is expected to be bad for the US stock market. He might not do much for China either.

£ 800million is the first – but not the last – draw for the HS2 overrun fund

The least surprising title winner of the day is “Cost of HS2 high-speed line increases by £ 800 million”. Apparently, the cost of upgrading Euston’s station will cost at least £ 400million more than expected, while finding more asbestos than expected will add another £ 400million to the bill.

Although there is a contingency fund to cover overruns, it is only £ 5.3bn. And one thing is for sure: £ 800million is the first draw from this reserve. It won’t be the last.


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