IMF Chief Offers 4-Point Plan to Combat Coronavirus

Managing Director of International Monetary Fund (IMF) Kristalina Georgieva. Photo: IMF
Managing Director of International Monetary Fund (IMF) Kristalina Georgieva. Photo: IMF

The managing director of International Monetary Fund (IMF), Kristalina Georgieva, said today that coronavirus (COVID-19) has disrupted the world’s social and economic order at lightning speed and on a scale not seen in living memory.

She said the virus is causing tragic loss of life, and the lockdown needed to fight it has affected billions of people. While IMF will reveal its plan of action toward economic recovery in its virtual Spring Meetings next week, Ms Georgieva has suggested a 4-point plan for individual countries particularly in the developing world.

She says it is essential to continue the containment measures and support for health systems. “Some say there is a trade-off between saving lives and saving livelihoods. I say it is a false dilemma,” she warned.

The 4-Point Plan

1. Continue with essential containment measures and support for health systems.
2. Shield affected people and firms with large, timely, targeted fiscal and financial sector measures.
3. Reduce stress to the financial system and avoid contagion.
4. Even as we move through this containment phase, we must plan for recovery.

Given this is a pandemic crisis, defeating the virus and defending people’s health are necessary for economic recovery, she said. “So the message is clear: prioritize health spending for testing and medical equipment; pay doctors and nurses; make sure hospitals and makeshift clinics can function.”

In order to protect the affected people and firms, she suggests a number of fiscal and financial sector measures. These include tax deferrals, wage subsidies, and cash transfers to the most vulnerable; extending unemployment insurance and social assistance; and temporarily adjusting credit guarantees and loan terms.

While reducing the stress on the financial system and avoiding contagion, Ms Georgieva suggested to plan for economic recovery. Again, she said, we must minimize the potential scarring effects of the crisis through policy action now.

“This requires careful consideration of when to gradually ease restrictions, based on clear evidence that the epidemic is retreating. As measures to stabilize the economy take hold and business starts to normalize, we will need to move swiftly to boost demand,” she said.

“Coordinated fiscal stimulus will be essential. Where inflation remains low and well-anchored, monetary policy should remain accommodative. Those with greater resources and policy space will need to do more; others, with limited resources will need more support,” Ms Georgieva said.

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Rakesh Raman