More needs to be done by the international community in order to address the economic impact of the novel coronavirus pandemic which started n China at the end of last year and then spread to the rest of the world. This was commented by the head of the International Monetary Fund amidst the organization’s public call on the World Bank to accelerate its lending to the African countries that have been hit hard economically by the pandemic.
According to experts, the most pressing issue will be about how to support struggling countries when the virtual and elongated annual meetings of the IMF and World Bank takes place later this week.
“We are going to continue to push to do even more,” IMF Managing Director Kristalina Georgieva said during an online FT Africa summit.
“I would beg for also more grants for African countries. The World Bank has grant-giving capacity. Perhaps you can do even more… and bilateral donors can do more in that regard,” Georgieva said in an unusual public display of discord between the two major international financial institutions.
There were no comments available on the issue from the World Bank.
Since the start of the crisis, $26 billion in fast-track support to African states have been provided by the IMF, but the region was facing a financing gap of $345 billion through 2023 because of a shortage of private lending, Georgieva last week.
According to World Bank estimates, African economies have been hit particularly hard by the pandemic as well as a collapse in commodity prices and a plague of locusts which has resulted in more than 43 million more people being pushed to the brink of extreme poverty,
More than 1 million coronavirus cases and some 23,000 deaths have ben reported by African countries.
The Debt Service Suspension Initiative (DSSI) initiative taken by the G20 governments is expected to be extend for another six months. Using this initiative the group of countries has so far frozen debt payments of poorer countries worth about $5 billion. However there is pressure to do the same on the main development banks and private creditors.
The IMF is also urging the richer member countries to lend more to the poorer countries from their existing Special Drawing Rights (SDR), the IMF’s currency, for supporting such countries, Georgieva said and added that the Fund was “very committed” to work out ways for restructuring of the debts for countries like Zambia.
Arguing that more SDRs would be beneficial mostly to the richer countries and not the developing and poorer economies that need it most, Georgieva’s early call for issuance of more SDRs has been blocked by the United States.
An IMF spokeswoman said that despite promises of contributing about $21 billion to date, including $14 billion in existing SDR holdings, have been made by members countries to the Fund’s Poverty Reduction and Growth Trust, which supports low-income countries, more finances were needed urgently.
Those countries who are in serious economic turmoil because of the pandemic should immediately take steps to restructure their debts, Georgieva said.
(Adapted from NationalPost.com)