Director-General of the International Monetary Fund (IMF) Kristalina Georgieva has expressed concern that the global economy was facing a severe decline and a difficult journey despite the tremendous efforts of the G20 to promote policies that restore confidence in pluralism, overcome the pandemic with minimal losses, while working to improve people’s lives, empower women and create greener and fairer economies.
In an interview with Asharq Al-Awsat, Georgieva revealed a study of a package of options to further adapt the IMF’s lending toolkit to support eligible countries. She noted that by the end of 2020, expectations point to a global economic contraction by 4.4 percent – a bit lower than early 2020 estimates.
But she warned that the world was still facing the worst recession since the Great Depression, adding that the road ahead would be steep and the journey difficult.
The IMF director said that the partial recovery achieved so far was due to extraordinary measures to address the health crisis and protect the economy. She explained that G20 governments have provided around $12 trillion in financial support to families and businesses.
Unprecedented monetary policy measures kept the credit flowing, she underlined, which helped millions of companies stay in business.
On poor countries, the IMF Director said that access to financing remained difficult, adding that the Fund expects the recovery to be partial and uncertain, because there is currently no final remedy to the health crisis.
According to Georgieva, health measures remain a top priority, along with concerted global efforts to secure vaccines and treatments for a permanent exit from the epidemic, pointing out that until then, policymakers must avoid early withdrawal of financial and monetary support to prevent a wave of bankruptcies and unemployment.
On her expectations regarding the reopening of the European economy, she noted that recent IMF estimates for Europe indicated that GDP would decline by 7% in 2020. As in the global economy, a partial and uneven recovery is expected, while real GDP is estimated to recover by 4.7% in 2021.
Georgieva stressed that the Europeans have acted very decisively to mitigate the effects of the external shock, as fiscal measures were estimated at 6 percent of GDP for advanced European economies and 3 percent of GDP for emerging economies.
She pointed out that the unprecedented political response to the health crisis prevented a much worse outcome, saying that at least 54 million jobs were supported through furlough plans in Europe.
Nevertheless, Georgieva pointed to great risks in the future, especially because the course of the epidemic remains uncertain, and the second wave of infections intensifies in Europe.
Regarding the role of the IMF in the coronavirus pandemic, she said the Fund was the center of the global financial safety net.
Georgieva said that since the beginning of the outbreak, the IMF has provided more than $100 billion in funding to 81 countries, including 48 low-income states. In addition, the Fund worked to strengthen the members’ ability to benefit from emergency funding and expanded increased access until 2021.
She also revealed that the IMF was studying a package of options to further adapt the Fund’s lending toolkit to support countries at this moment of extreme uncertainty.
Georgieva said the IMF was ready to help members move forward in a post-pandemic world by investing in people, the digital economy and the green economy.
