IMF: Coronavirus Situation May Require “Exceptional Measures”

The IMF head, Kristalina Georgieva, admitted that the organization will have to “leave the comfort zone”. The International Monetary Fund may have to move out of its comfort zone and consider “exceptional measures” to help countries cope with the coronavirus pandemic and minimize its economic consequences, head of the organization Kristalina Georgieva said on Monday. As Georgieva writes on the IMF official website blog, the organization has already taken a number of emergency measures, especially for emerging markets and developing countries, where capital outflows in recent months have reached a record $ 100 billion. However, Georgieva continues, if the pressure on the markets continues, additional resources will be required, and lending, even under simplified conditions, is not always the best way out, especially given the already impressive debt burden of many countries. “The IMF, like our member countries, may have to go even further beyond the comfort zone and think about whether exceptional measures are needed in this exceptional crisis situation,” she notes, adding that one of the possible ways is to intensify cooperation with other international institutions and the private sector. Georgieva did not specify the details. On Friday, the IMF and the World Bank published a joint report stating that more countries may need debt relief, in addition to the 77 poorest countries that have already been promised suspension of official bilateral loans. Georgieva also again called for the possible distribution of SDRs (special drawing rights), which the US is opposed to. This step is akin to a central bank “printing” new money. According to the latest IMF forecast, the global economy will decline by 3 percent in 2020 - this is the worst recession since the Great Depression of the 1930s. “We are ready to use all our credit potential and mobilize all layers of the global financial security network,” Georgieva wrote in a blog. Last week, US Treasury Secretary Steven Mnuchin opposed the issue of SDRs, noting that 70 percent of the funds received through this would go to the G20 countries, most of whom do not need it, while the poorest countries will get only 3 percent. Last week, Reuters reported that the United States is blocking the issue of SDRs, as this will provide new financing channels for Iran and China. Instead, Mnuchin called on advanced economies to invest in IMF funds, from which funds are allocated to the poorest countries. He also said that the United States is considering such an opportunity. Georgieva praised the generous contribution of the UK, Japan, Germany, the Netherlands, Singapore and China to the Trust Fund to limit and overcome the consequences of disasters, from which grants for servicing loans from the IMF are allocated to poor countries. She also thanked Japan, France, the United Kingdom, Canada, and Australia for their promise to expand the Trust Fund to reduce poverty and promote economic growth to $ 11.7 billion, representing about 70 percent of the IMF's $ 17 billion target.