“We know what steps need to be taken now,” said IMF Managing Director Kristalina Georgieva.
Washington:
Faced with the dual task of fighting the coronavirus pandemic today and building a better future, the world is experiencing a new moment in Bretton Woods, IMF Managing Director Kristalina Georgieva said on Thursday.
“Today we face a new moment at Bretton Woods. A pandemic that has already cost more than a million lives. An economic calamity that will reduce the world economy by 4.4% this year and strip production estimated at 11 trillion dollars by next year. And untold human despair in the face of enormous disruption and rising poverty for the first time in decades, ”she said at the annual meeting of the IMF’s Board of Governors.
“Once again, we are faced with two major tasks: fighting the crisis today and building a better future,” she said.
She said that what was true at Bretton Woods, when the allies at the end of World War II gathered for a conference to create the institutions that would use economic cooperation to prevent future conflicts, remains true today. .
Prudent macroeconomic policies and strong institutions are essential for growth, jobs and improving living standards, she said.
Strong medium-term frameworks for monetary, fiscal and financial policies, as well as reforms to boost trade, competitiveness and productivity can help build confidence for immediate political action while building the resilience needed for the economy. future, she added.
“We know what action needs to be taken now. A lasting economic recovery is only possible if we beat the pandemic. Health measures must remain a priority. I urge you to support the production and distribution of effective therapies and vaccines to ensure that all countries have access, ”Georgieva said.
She also urged countries to continue supporting workers and businesses until a lasting exit from the health crisis.
“We have seen global fiscal actions of $ 12 trillion. Major central banks have enlarged their balance sheets by $ 7.5 trillion. These synchronized measures have prevented the destructive macro-financial reactions we have seen in previous crises. “she said.
“But almost all countries are still suffering, especially emerging and developing countries. And while the global banking system has entered the crisis with high capital and liquidity buffers, there is a weak tail of banks. in many emerging countries. We must take measures to prevent the build-up of financial risks in the medium term, “she said.
The IMF expects debt levels in 2021 to increase significantly – to about 125 percent of GDP in advanced economies, 65 percent of GDP in emerging markets; and 50 percent of GDP in low-income countries, Georgieva added.
The fund provides debt relief to its poorest members and, along with the World Bank, supports the G20’s extension of the Debt Service Suspension Initiative.
“Beyond that, where debt is unsustainable, it must be restructured without delay. We must move towards greater debt transparency and better coordination of creditors. I am encouraged by the G-20 discussions on a common framework for sovereign debt settlement as well as our call for improving the sovereign debt resolution architecture, including private sector participation, ”she said.
Georgieva said that to take full advantage of a sound economic policy, they need to invest more in people. It means protecting vulnerable people. It also means boosting human and physical capital to support growth and resilience, she argued.
“Just as the pandemic has shown that we can no longer ignore health precautions, we can no longer afford to ignore climate change … We focus on climate change because it is macro-critical and poses a profound threat to the world. growth and prosperity. -critical and critical for the planet, ”said the Managing Director of the IMF.
The IMF, she said, is working tirelessly to support a sustainable recovery and a resilient future as countries adapt to structural transformations induced by climate change, digital acceleration and the booming economy. of knowledge.
Since the start of the pandemic, the IMF has committed more than $ 100 billion and still has substantial resources from its $ 1 trillion lending capacity, she said.
“We will continue to pay special attention to the urgent needs of emerging markets and low-income countries, especially small, fragile states, helping them pay doctors and nurses and protect the most vulnerable and parts of them. their economy, ”she said.
