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Observing that the coronavirus disease has presented all with significant and potentially daunting challenges, Lesetja Kganyago, chairman for the International Monetary and Financial Committee (IMFC), said the international community was far from declaring victory on the outcomes or the outlook.
“The IMF’s policy tracker shows that fiscal measures so far have amounted to about $8 trillion and liquidity injections by central banks amounting to over $6 trillion,” Kganyago told reporters during a news conference on Friday. However, exchange rate and liquidity pressures remain important challenges, he said.
“We are convinced that an aggressive response coordinated through the IMF will lead to more positive economic and humanitarian results than would otherwise be possible.
“Beyond the serious human impact of the pandemic, we agreed today that the economic repercussions will be severe, particularly for emerging markets and developing countries, commodity exporters and economies with weak health systems,” Kganyago said.
“A global recession and severe uncertainty have now gripped our societies. Most of us have taken extraordinary measures to support health systems and affected workers and businesses,” he said.
During the meeting, he said the IMFC reviewed and supported the package of financial support that the organisation had quickly put together in the wake of the deadly COVID-19. The IMF’s crisis response initiatives — outlined in the IMFC communique — are critical features of efforts to contain the impact of COVID-19, the official said.
The fund has revamped the toolkit by doubling access levels to emergency facilities, expanding the use of precautionary lines, establishing a news short-term liquidity line and considering other options to help countries meet their financing needs.
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According to Kganyago, the IMFC, including donor countries, agreed on the importance of ensuring that the IMF could support its poorest and most vulnerable members.
The meeting, welcomed the coordinated approach agreed by the G20 and the Paris Club for a time-bound suspension of debt service payments by bilateral official creditors for the poorest countries that request forbearance. It also encouraged private creditors to participate on comparable terms as well, Kganyago said.
IMF managing director Kristalina Georgieva said there was unanimous support of the membership for the doubling of access to emergency financing, which meant some 50 countries would received help that by the end of this month. The IMF has requests from 102 countries.
“We are able to step up support for our poorest members. We now have more resources for our Catastrophe Containment and Relief Fund with, now, the UK, Japan, China, the Netherlands, and in addition as of today, Germany, helping us to boost capacity to over $600 million,” she said.
The IMFC called on the membership to urgently provide $17 billion of concessional financing for its poverty reduction and growth trust. During the meeting, they received 70 percent of the commitments from members.