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IMF chief paints bleak picture of global economy

The Managing Director of  International Monetary Fund (IMF) Kristalina Georgieva on Monday said the global economic outlook remained highly uncertain  as a result of  the coronavirus pandemic, and a growing divergence between rich and poor countries required the IMF to find more resources.

Georgieva said a new allocation of the IMF’s own currency, Special Drawing Rights, would give countries more fiscal space to address the health crisis and accelerate moves to a digital and green economy.

Under outgoing President Donald Trump, the United States, the IMF’s largest shareholder, has blocked such a move, arguing it would provide more resources to richer countries since the allocation would be proportionate to their shareholding.

Swedish Finance Minister Magdalena Andersson, the new chair of the IMF’s steering committee speaking at an online news conference with Georgieva, said it was clear the need for liquidity remained great, and she would consult with member countries on options for expanding liquidity.

Georgieva said the IMF had increased concessional financing to emerging market and developing economies, including through donation of some $20 billion in existing SDRs.

“It will continue to be so important, even more important, for us to be able to expand our capacity to support countries that have fallen behind,” Georgieva said.

The option of carrying out a new SDR allocation – something akin to central bank printing money – had never been taken off the table by IMF members, she said, adding that some members continued to discuss it as a possible move.

 

 

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