International Monetary Fund Managing Director Kristalina Georgieva made the following statement today following a conference call of G20 Leaders’ Summit:
“I am grateful to the Saudi presidency for calling this extraordinary summit – so we can close ranks as a global community to protect people’s lives and guard the world economy. We project a contraction of global output in 2020, and recovery in 2021. How deep the contraction and how fast the recovery depends on the speed of containment of the pandemic and on how strong and coordinated our monetary and fiscal policy actions are.
“You, the G20 leaders, have already taken extraordinary steps to save lives and safeguard your economies.
“Particularly critical is the targeted fiscal support to vulnerable households and to large and small businesses, so they can stay afloat and get quickly back to work. Otherwise it will take years to overcome the effects of widespread bankruptcies and layoffs.
“Such support will accelerate the eventual recovery, and put us in a better condition to tackle challenges such as debt overhangs and disrupted trade flows.
“And it is paramount we recognize the importance of supporting emerging market and developing economies to overcome the brunt of the crisis and help restore growth. They find themselves particularly hard hit by a combination of health crisis, sudden stop of the world economy, capital flight to safety, and – for some – sharp drop in commodity prices. These countries are the main focus of our attention. We have a considerable, $1 trillion strong, financial capacity to place in their defense, working closely with the World Bank and other International Financial Institutions (IFIs). The challenge though is enormous:
- Exceptionally large number of countries simultaneously require IMF emergency financing.
- Emerging markets are dramatically impacted by record high capital outflows and severe shortage of FX liquidity
- Many low income countries step into this crisis under a high burden of debt.
“We must act at par with the magnitude of the challenge. For us at the IMF it means working with you to make our crisis response even stronger. For this we ask your backing to
- Double our emergency financing capacity.
- Boost global liquidity through a sizeable SDR (Special Drawing Right) allocation, as we successfully did during the 2009 global crisis and by expanding the use of swap type facilities at the Fund
- Support action of official bilateral creditors to ease the debt burden of our poorest members during the times of global downturn.
“We will get through this crisis together. Together we will lay the ground for a faster and stronger recovery.”