The International Monetary Fund (IMF) yesterday disclosed that it has earmarked $1 trillion lending capacity for its 189 member countries to combat the impact of COVID-19 on the global economy.
This is coming after the United States Federal Reserve cut interest rates to almost zero and launched a $700 billion stimulus programme in a bid to protect the economy from the effect of coronavirus.
Managing Director of IMF, Kristalina Georgieva, said that Central Banks’ policy action in emerging-market and developing economies will need to address capital flow reversals and commodity shocks during this period.
According to her, the Fund can deploy its flexible and rapid-disbursing emergency response toolkit to help countries with urgent balance-of-payment needs.
She said: ‘‘These instruments could provide in the order of $50 billion to emerging and developing economies. Up to $10 billion could be made available to our low-income members through our concessional financing facilities, which carry zero interest rates. Georgieva explained that the Fund already has 40 ongoing arrangements, with combined commitments of about $200 billion.
‘‘We also have received interest from about 20 more countries and will be following up with them in the coming days.
In addition, the Fund’s Catastrophe Containment and Relief Trust (CCRT) can help the poorest countries with immediate debt relief, which will free up vital resources for health spending, containment, and mitigation. The IMF boss lauded the UK government for pledging $195 million, which, according to her, means the CCRT now has about $400 million available for potential debt relief. Our aim, with the help of other donors, is to boost it to $1 billion.
She maintained that Governments should continue and expand these efforts to reach the most affected people and businesses—with policies including increased paid sick leave and targeted tax relief.
