IMF: The Global Economy Will Cope with COVID-19 Pandemic Consequences

According to the representative of the IMF, the crisis came at the time when the world economy is ready for shocks. The main goal today is to limit the spread of coronavirus. The consequences of the coronavirus spreading will be quite serious but the world economy will be able to deal with, Martin Mühleisen, director of the strategy, policy and analysis department of the International Monetary Fund (IMF), said. He stated this in an interview to the IMF website on Friday, March 20. The continued growth of global economy and the high level of employment will create some groundwork against the very weak economic activity over the next months due to the coronavirus pandemic, the expert said. According to Mühleisen, the crisis came at the time when the world economy was ready for shocks and financial institutions were in "better shape" than they were before the global economic crisis of the crisis in 2008. IMF could provide $ 50 billion for “resprisal” He stressed that the main thing today is to help limit the spread of coronavirus. “We need to make sure that at some point there is confidence that the shock will be temporary and the consequences will not last for many months,” he said. He also added that central banks and state governments should coordinate the measures taken. Earlier, Martin Mühleisen said that in case of a severe recession caused by COVID-19, the IMF could provide funds of up to $ 50 billion for emergency financing as start-up response in emerging and developing countries. EU announced unprecedented budget rules easing On March 20, European Commission President Ursula von der Leyen announced the weakening of budget spending rules for EU countries to mitigate the economic consequences of the coronavirus pandemic. According to her, the governments of the EU countries will be able to support many companies and entrepreneurs who are facing bankruptcy. This decision requires official approval of the EU member states. The head of the European Commission also said that the budget of the European Union will take on a part of the burden to save economies of the European Union countries. For this, 37 billion euros will be allocated to support health care and enterprises. According to the Stability and Growth Pact, the state budgets of the EU member states must be reduced to a positive or zero balance. In exceptional cases, the budget deficit is allowed but it should not exceed 3% of GDP by the end of the fiscal year. Public debt should not exceed 60% of GDP at the end of fiscal year or be close to this level.