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IMF chief urges greater support for poor nations fighting virus

Saying that economic growth will be restrained until the virus is brought under control everywhere.
Image: Andrew Harrer/Bloomberg

The International Monetary Fund called on its members to increase assistance to poor countries to deal with the Covid pandemic, saying that economic growth will be restrained until the virus is brought under control everywhere.

IMF members should look for ways to further expand concessional lending to help low-income nations speed vaccination, said Kristalina Georgieva, managing director of the fund. That means both steering existing reserve assets called special drawing rights, known as SDRs, to those nations, and exploring a new issuance of the assets, she said.

“The pandemic has made us all more sober about our interdependence,” Georgieva said in a television interview with Tom Keene for Bloomberg’s “The Year Ahead” virtual summit. “We do have a very strong signal from our largest shareholder, the United States, that we are going to work more together, from climate to helping developing countries in this crisis.”

Donald Trump’s administration blocked creation of $500 billion of reserves last year, saying they fail to target poor countries because they’re given to economies in proportion to size. Democratic lawmakers have urged President Joe Biden to support the plan, and Treasury Secretary Janet Yellen has said her team will analyze a full range of ways to help vulnerable nations.

The Washington-based IMF saw record lending demand last year as restrictions to prevent the spread of the virus brought much of the world economy to a standstill, increasing funding needs. The IMF has made more than $100 billion in new loans and guarantees available to more than 80 countries since March, mostly with limited or no conditions, and doubled the annual access limits to emergency loans.

Africa accounts for the majority of the IMF’s pandemic borrowers, with most countries in the region seeking assistance. The IMF wants African countries to be able to prioritise healthcare and vaccinations to help economies hit hard over the past year, Georgieva said.

“For the first time in decades, poverty is going up, hunger is going up,” Georgieva said. “Why we should worry about that everywhere? Because we count on developing economies for dynamic growth. If they don’t grow, that’s bad for the world economy.”

The IMF estimates that accelerated vaccine application around the world could increase global income by $9 trillion by 2025.

© 2021 Bloomberg

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