Coronavirus-hit world in recession as bad or worse than in 2009, says IMF chief Kristalina Georgieva

Over 80 countries, mostly of low incomes, have already have requested emergency aid from the International Monetary Fund, the IMF chief said.

Image courtesy: Reuters

Washington: The coronavirus pandemic has driven the global economy into a downturn that will require massive funding to help developing nations, IMF chief Kristalina Georgieva said Friday. "It is clear that we have entered a recession" that will be worse than in 2009 following the global financial crisis, she said in an online press briefing.

With the worldwide economic "sudden stop," Georgieva said the fund's estimate "for the overall financial needs of emerging markets is $2.5 trillion." But she warned that estimate "is on the lower end." Governments in emerging markets, which have suffered an exodus of the capital of more than $83 billion in recent weeks, can cover much of that, but "clearly the domestic resources are insufficient" and many already have high debt loads.

Over 80 countries, mostly of low incomes, have already have requested emergency aid from the International Monetary Fund, she said.

IMF’s Managing Director Kristalina Georgieva said ‘it is clear’ that the world has ‘entered a recession as bad or worse’ than the global financial crisis over a decade earlier. Follow for live updates: https://t.co/otckO9TQvF pic.twitter.com/xYn7wfVDqe

— Reuters India (@ReutersIndia) March 27, 2020

"We do know that their own reserves and domestic resources will not be sufficient," Georgieva said, adding that the fund is aiming to beef up its response "to do more, do it better, do it faster than ever before."

The IMF chief spoke to reporters following a virtual meeting with the Washington-based lender's steering committee, when she officially requested an increase in the fund's fast-deploying emergency facilities from their current level of around $50 billion.

She also welcomed the $2.2 trillion economic package approved by the US Senate, saying "it is absolutely necessary to cushion the world's largest economy against an abrupt drop the economic activities." 

Pakistan requests emergency coronavirus financing: IMF 

Pakistan has requested an emergency loan disbursement from the International Monetary Fund to help fight the coronavirus under the fund`s Rapid Financing Instrument program, IMF Managing Director Kristalina Georgieva said on Friday.

She did not identify the size of the loan, but under the program, Pakistan would be able to borrow up to its full quota -- about $2.76 billion -- over two years, or $1.43 billion over a single year to meet urgent balance-of-payments needs, said a Reuters report.

Pakistan already has an IMF $6 billion Extended Fund Facility loan program and Georgieva said the Pakistani authorities "have reaffirmed their commitment to the reform policies included in the current arrangement."

IMF approves first emergency COVID-19 aid for Kyrgyzstan

IMF on Thursday approved a disbursement of 120.9 million US dollars to address Kyrgyzstan`s COVID-19 outbreak, its first offer of emergency financial assistance since the pandemic started.

The IMF allocated 80.6 million dollars under the Rapid Financing Instrument (RFI) and 40.3 million dollars under the Rapid Credit Facility (RCF) to meet the urgent balance of payment needs stemming from the outbreak of COVID-19, IMF Managing Director Kristalina Georgieva said in a statement.

This is the first IMF emergency loan under the RFI/RCF worldwide since the outbreak of the pandemic, the statement said.

"We all understand that the outbreak weakened the macro and microeconomic prospects of Kyrgyzstan and showed a gap in the balance of payments, which is estimated at about 400 million dollars," Baktygul Zheenbaeva, Kyrgyzstan`s finance minister, said at a government briefing on Friday.

The IMF chief noted that the loan is on favorable terms, and will go towards supporting the country`s budget. According to the IMF statement, the emergency support will help provide a backstop, increase buffers, and shore up confidence during this time of uncertainty.

It will also help catalyze donor support and preserve fiscal space for essential COVID-19-related health expenditure. To date, 58 confirmed COVID-19 cases have been registered in Kyrgyzstan, according to the country`s ministry of health, said an ANI report.