L to R: Governor of Bank of From Ghana's Ernest Kwamina - IMF Managing-Director Kristalina Georgieva - President of World Bank David Malpass
Covid-19 is expected to cause a $11 trillion drop in global output over 2021, International Monetary Fund (IMF) managing director Kristalina Georgieva has revealed.
Georgieva's statements came during a virtual event held onThursday as a part of the IMF and World Bank Group (WBG) annual meetings, which kicked off Monday and last through 18 October.
The event was also attended by president of the World Bank David Malpass and governor of the Bank of Ghana Ernest Kwamina.
Public debt levels to GDP ratio are expected to record 125 percent in advanced economies, 65 percent in emerging markets and 50 percent in low-income countries in 2021 as a result of the ongoing Covid-19 crisis, Georgieva disclosed.
“An endurable global recovery is possible if the virus is beaten. Until then, countries need to deal with their elevated debt levels and their low production. In addition, the need to implement fiscal policies that pave the way for more resilient economies and to put policies to the centre on improving education, boosting training, expanding the digital transformation and green economy,” according to Georgieva.
Georgieva said that expanding internet access by 10 percent of the population in Sub-Saharan Africa, for instance, is expected to add four percent to the region’s per-capita GDP growth.
On green investments, Georgieva said that expanding green and low-carbon projects is expected to create millions of jobs and to contain the damage caused by climate change that amounted to $1.3 trillion in 2019.
For his part, Malpass said that the Covid-19 crisis has knocked more economies into simultaneous recession than at any time since 1870, and it could lead to a lost decade characterised by weak growth, the collapse of many health and education systems, and a new round of sovereign-debt crises.
Addressing the ongoing crisis, Malpass said that the WBG has approved $160 billion in financing over 15 months, going to 111 countries, much of it directed to the poorest countries, adding that over $50 billion was in the form of grants or low-rate, long-maturity loans, providing key support to maintain or expand healthcare systems and social safety nets.
Concerning human capital, Malpass said that due to the outbreak more than 1.6 billion children in developing countries have been out of school, implying a potential loss of as much as $10 trillion in lifetime earnings for these students.
“Gender-based violence is on the rise. Child mortality rates are also likely to rise significantly,” he added.
On debt burdens, that are witnessing a significant surge amid the crisis, Malpass revealed that the G20 Debt Service Suspension Initiative (DSSI), which took effect 1 May, has been extended for six months in response to the crisis, adding that as of early October, 44 countries were benefiting from an estimated $5 billion in debt service relief.
Malpass urged all countries to adopt policies that can lead to a resilient, inclusive and sustainable recovery, with a special focus on green economy, noting that over the last five years the WBG provided $83 billion in climate-related investment.