IMF provided 80 countries with $91 bln since onset of COVID-19: Annual report

Doaa A.Moneim , Tuesday 17 Nov 2020

The IMF's managing director Kristalina Georgieva said that the governments faced the crisis by allocating nearly $12 tln in fiscal actions and about $7.5 tln in monetary actions

Kristalina Georgieva

The International Monetary Fund (IMF) has provided 80 countries across the world with about $91 billion in financing as of 15 September, including $11.3 billion to 48 low-income countries since the onset of the pandemic in late March.

In its annual report for 2020, released on Monday, the IMF said it channeled $30 billion in financing to 69 countries through emergency lending facilities, adding that it provides financing to member countries experiencing actual, potential, or prospective balance of payments problems to help them rebuild their international reserves and restore conditions for robust economic growth, while correcting underlying problems.

The IMF also said it has massively stepped up emergency financing to help member countries address the immediate impact of the COVID-19 pandemic.

Meanwhile, the IMF awarded $215,000 in grants to charities worldwide in FY 2020, as well as $200,000 in exceptional grants to local non-profit organisations in response to the COVID-19 pandemic. In addition, corporate donations totalling $110,000 were provided by senior management during mission travel to developing economies to support grassroots charities, according to the report.

The report stressed that the global economy, under the COVID-19 outbreak threat, is facing a deep recession with an ongoing impact of the pandemic and uncertainty remains around the outlook, alongside the long-term forces that shape and influence countries’ response to the pandemic and the recovery process.

Yet, the current crisis and its associated long-term impacts can offer opportunities to build better green, resilient and sustainable economies, according to the report.

The report also disclosed that 50 percent of low-income countries are at high risk of debt distress and the COVID-19 pandemic can stall their economies and reverse financing flows, which further makes them unable to manage their debt.

In this regard, the IMF, along with other partner institutions, has worked with low-income countries to help strengthen their debt management and transparency practices, including providing technical support as countries develop and publish debt management strategies and debt reports.

On the interest rates, the report said that low interest rates for over a decade have led to accumulated global financial risks and historically high levels of government and private debt in most countries that significantly increased with the pandemic, which has led to large increases in debt and deficits during the global financial crisis.

“Low interest rates make borrowers more vulnerable if interest rates rise, and they erode bank profits, which hampers banks’ ability to lend money to businesses so they can grow,” read the report.

In her message within the report, Managing Director of the IMF Kristalina Georgieva said that in 2020 the world faced a crisis like no other, and that the IMF and its members swung into action to contain the crisis and its repercussions.

She added that governments took bold steps to save lives and put a floor under the world economy, with nearly $12 trillion in fiscal actions and about $7.5 trillion in monetary actions.

“The package of measures endorsed as part of the quota review approved by the Board of Governors in February 2020 preserves our financial firepower. These measures include the doubling of the New Arrangements to Borrow and a new round of bilateral borrowing arrangements, which are expected to be effective in January 2021,” said Georgieva.

She added that the IMF has committed over $100 billion to help members in need since the pandemic started, which included providing the IMF’s low-income members with much-needed debt relief, extended until April 2021, and concessional lending—including about 10 times more such lending since the crisis hit than the IMF usually disburses in a year.

“Our response was comprehensive, supporting both members that entered the crisis with vulnerabilities such as high debt and those that have good fundamentals but needed buffers,” said Georgieva.

In response to the crisis, the IMF focused on its members’ most critical needs, as it streamlined its procedures and rapidly embraced remote work to speed up decision-making, policy discussions, technical assistance, and training, as well as creating a policy tracker summarising the key economic responses of 196 economies, according to Georgieva.

“With substantial space in our $1 trillion lending capacity, the IMF is ready to help even more. Working with our members—now numbering 190 with the addition of Andorra—we can build a recovery that is more resilient and inclusive for all,” Georgieva explained.

She also noted that the outlook remains uncertain, and the globe now face a long ascent that will be difficult, uneven, uncertain, and prone to setbacks.

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