IMF, World Bank vow to assist nations hardest hit by Covid-19 lockdowns
By Alex Segura Lozano
Washington, Apr 17 (efe-epa).- The International Monetary Fund and World Bank Group wrapped up their 2020 Virtual Spring Meetings on Friday with a pledge to help the countries hardest hit economically by the stringent coronavirus containment measures.
With hundreds of millions of people on lockdown worldwide, the IMF said at the start of the meetings on Tuesday that efforts to mitigate the health emergency will provoke an economic crisis comparable to the Great Depression of the 1930s.
The leaders of the IMF and World Bank Group – Kristalina Georgieva and David Malpass, respectively – now face the challenge of coordinating an effective response to an economic crisis that is certain to leave no nation unscathed.
And although those international organizations are forecasting a partial global economic recovery by 2021, uncertainty surrounding the health response to the pandemic could cause the economic pain to persist further.
In a virtual press conference on Friday, the World Bank Group’s president warned of a “much deeper global downturn than the (2007-2009) Great Recession” and said the world’s least developed countries would be disproportionately affected.
“While the tragic impacts of this pandemic are being felt globally, this crisis will likely hit the poorest and most vulnerable countries – and people – the hardest,” Malpass said.
“As of this morning, the World Bank has financed, and staff are implementing, Covid-19 programs in 64 developing countries. And we’ll have 100 countries under way by the end of April,” he added.
Malpass said a massive international response is being planned for the world’s 76 poorest developing countries (those eligible for International Development Association support), including nations in Africa, East Asia, South Asia, Europe and Central Asia, Latin America and the Caribbean and the Middle East and North Africa.
“The World Bank will be providing massively scaled up and front-loaded positive net transfers to IDA countries on highly concessional terms, and the IMF has its own highly impactful initiatives,” he added.
Georgieva said Thursday that more than half of the IMF’s 189 member states have already requested financial assistance amid the economic fallout from the pandemic.
“We meet during exceptional times. And exceptional times call for exceptional action,” the IMF’s managing director said after a virtual meeting of the International Monetary and Financial Committee.
“More than ever, we must work together to respond to this unprecedented crisis and prepare for recovery,” she said.
Of the 102 nations that have approached the IMF for help, 15 – including El Salvador, Ecuador, Madagascar and Rwanda – have already seen their applications approved, while Fund officials are expected to make decisions on dozens of other applications by the end of April.
The Fund’s latest economic forecast, released this week, predicts a global contraction of 3 percent in 2020, compared with a 0.1 percent decline in 2009 due to the financial crisis.
And the IMF’s projections for individual countries are even more alarming, with the United States’ GDP predicted to shrink by 5.9 percent, the eurozone’s economy forecast to contract by 7.5 percent and Japan’s GDP expected to retreat by 5.2 percent.
In a meeting Friday, the joint World Bank-IMF Development Committee concluded that a “sharp decline in global investor confidence has severely tightened external financing conditions for countries across the income spectrum.”
The efforts to control the pandemic also are disrupting trade, supply chain and investment flows and “leaving financial and human capital idle, while remittances, transport revenues, and income from tourism have rapidly diminished.”
“We ask the (World Bank Group) to help countries mitigate these disruptions and support efforts to preserve jobs and boost confidence,” the Development Committee said in a statement.
Malpass said Friday that the world’s multilateral banks have a total of $240 billion in emergency aid available for countries hit by the pandemic.