WASHINGTON: The International Monetary Fund (IMF) said on Monday it’s ready to use its $1 trillion lending capacity to help countries struggling with the humanitarian and economic impact of the novel coronavirus (COVID-19).
On Sunday, the US Federal Reserve offered a massive monetary stimulus to encourage economic growth, by slashing interest rates to zero. It also launched a $700 billion quantitative easing programme to shelter the economy from the effects of the virus.
“The IMF stands ready to mobilise its $1 trillion lending capacity to help our membership,” IMF managing director Kristalina Georgieva said in a statement. “As a first line of defence, the Fund can deploy its flexible and rapid-disbursing emergency response toolkit to help countries with urgent balance-of-payment needs.”
The Fund, she said, could provide up to $50bn to emerging and developing economies and up to $10bn to its low-income members through “our concessional financing facilities, which carry zero interest rates”.
The IMF already has 40 ongoing arrangements — both disbursing and precautionary — with combined commitments of about $200bn.
“In many cases, these arrangements can provide another vehicle for the rapid disbursement of crisis financing. We also have received interest from about 20 countries and will be following up with them in the coming days,” Ms Georgieva said.
The IMF chief said the Fund’s Catastrophe Containment and Relief Trust (CCRT) could help the poorest countries with immediate debt relief, which will free up vital resources for health spending, containment, and mitigation.
Britain recently pledged $195 million to the Trust, increasing CCRT’s fund to about $400m, which is available for potential debt relief.
“Our aim, with the help of other donors, is to boost it to $1bn,” Ms Georgieva said, adding that this would allow the IMF can serve its 189 member countries and demonstrate the value of international cooperation.
“Because, in the end, our answers to this crisis will not come from one method, one region, or one country in isolation,” she wrote. “Only through sharing, coordination, and cooperation will we be able to stabilise the global economy and return it to full health.”
In the statement, posted on the IMF website, Ms Georgieva argued that “while quarantining and social distancing is the right prescription to combat COVID-19’s public health impact, the exact opposite is needed when it comes to securing the global economy.”
Published in Dawn, March 17th, 2020