Managing Director of the International Monetary Fund (IMF), Ms Kristalina Georgieva, has said due to the continuing impact of the COVID-19 pandemic, the global economy faces a deep recession this year, with partial and uneven recovery expected in 2021.
She made the comment on Monday, July 20, 2020, at the conclusion of the virtual meeting of the Group of 20 (G20) Finance Ministers and Central Bank Governors, chaired by Saudi Arabia.
“While there remains great uncertainty on the outlook, the unprecedented actions taken by the G20 countries and others have helped to avert a much worse outcome. As we enter the next phase of the crisis, further policy action will be required, as well as increased international cooperation. The G20 Action Plan is key to this effort.
“To support countries in fighting the crisis and to prevent long-lasting scarring of the global economy—particularly waves of bankruptcies, risks to financial stability, high unemployment, and increasing inequality—I emphasised the following:
“First, the public health response remains the main priority to protect people, jobs, and economic activity. Across the world, countries have implemented exceptional measures to support individuals and workers. These lifelines should be maintained as needed and, in some cases, expanded.
“Second, supportive fiscal and monetary policies will need to continue until we can secure a safe and durable exit from the crisis. Premature withdrawal of this support could derail the recovery and incur larger costs.
“Third, policies need to prepare for and support transformational change, as some sectors may permanently shrink, while others—such as digital services—will expand. Adapting to change in an inclusive manner will require adequate social protection, and training and job search assistance to workers.
“Fourth, we need to unite to help the poorest and most vulnerable economies, especially those struggling with high debt or dependent on hard-hit sectors. The G20’s Debt Service Suspension Initiative (DSSI) has been commendable and I hope that consideration will be given to extending it. In addition, to make it even more effective, greater private sector participation, and greater debt transparency, should be strongly promoted. Beyond the DSSI, there is a need to fill gaps in the international debt architecture and think about more comprehensive debt relief for many countries. We stand ready to support these efforts,” she said.
She also emphasised that the global community can use the crisis as an opportunity to build a better future for all people by maximising the potential of the digital economy; promoting green investment to combat climate change in a job-rich manner; and investing in human capital to build a more inclusive economy.
“The IMF has moved with unprecedented speed—providing emergency financing to 72 countries in four months—and we will continue to support our member countries relentlessly. We see especially pressing needs to assist low-income countries, and small and fragile states which have been hit very hard—with the support of our membership, we continue to mobilize additional concessional resources to help them. In this context, we are stepping up action to make better use of existing Special Drawing Rights (SDRs).
She said the IMF will explore additional tools that could further help in this crisis like no other.
She gave the assurance that the Fund will play its role as the centre of the global financial safety net in this time of unprecedented need for its member countries.
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