Home Business Economic Impact from COVID-19 ‘Much Worse’ than 2008 Recession: IMF Chief

Economic Impact from COVID-19 ‘Much Worse’ than 2008 Recession: IMF Chief

by Newsweek Pakistan
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Saul Loeb—AFP

Kristalina Georgieva says global fund is urging bilateral creditors to suspend debt collections from poorest countries for at least a year

The International Monetary Fund (IMF) on Friday warned that the ongoing coronavirus pandemic, which has brought the global economy to a standstill, has had a “way worse” impact than the financial crisis of 2008.

Addressing a joint press conference with World Health Organization chief Tedros Adhanom Ghebreyesus, IMF Managing Director Kristalina Georgieva urged advanced economies to step up efforts to help emerging markets and developing countries survive the economic and health impact of the pandemic in “humanity’s darkest hour.”

“This is a crisis like no other,” she said on a video conference call, as reported by Reuters. “We have witnessed the world economy coming to a standstill. We are now in recession. It is way worse than the global financial crisis” of 2008-2009.

More than 1 million people worldwide have been infected with COVID-19, and more than 53,000 have died.

Georgieva said the IMF was working with the World Bank and WHO to advance their call for China and other official bilateral creditors to suspend debt collections from the poorest countries for at least a year until the pandemic subsides. She said China had engaged “constructively” on the issue, and the IMF would work on a specific proposal in coming weeks with the Paris Club of creditor nations, the Group of 20 major economies and the World Bank for review at the annual Spring Meetings, which will be held online in about two weeks.

Emerging markets and developing economies have been worst hit by the crisis, Georgieva said, noting that nearly $90 billion in investments had already flowed out of emerging markets, far more than during the financial crisis. Some countries are also suffering from sharp drops in commodity prices.

More than 90 countries—nearly half the IMF’s 189 members—have asked for emergency funding from the IMF to respond to the pandemic, she said.

The IMF and WHO have called for emergency aid to be used mainly to strengthen health systems, pay doctors and nurses, and buy protective gear.

Georgieva said the IMF stood ready to use as much of its “war chest” of $1 trillion in financing capability as needed. The IMF has begun disbursing funds to requesting countries, including Rwanda, with requests from two additional African nations to be reviewed on Friday, she said.

“This is, in my lifetime, humanity’s darkest hour—a big threat to the whole world—and it requires from us to stand tall, be united, and protect the most vulnerable of our fellow citizens,” she said.

She said central banks and finance ministers had already taken unprecedented steps to mitigate the effects of the pandemic and stabilize markets, but more work was needed to keep liquidity flowing, especially to emerging markets.

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