…Harps on what Central Banks must do now
…Says economic fortunes divergent dangerously
Emma Ujah, Abuja Bureau Chief
The International Monetary Fund (IMF) is to propose a $650 billion Special Drawing Rights (SDR) to its member countries in the organisation’s efforts to boost their reserve positions.
The Managing Director (MD) of the IMF, Ms Kristinalina Georgieva, disclosed during a press briefing at the ongoing virtual IMF-World Bank Spring Meetings, that the G20 had given the needed node for the proposal to be tabled before members yesterday.
According to her, “As indicated by the G20 today, we will propose a new Special Drawing Rights (SDR) allocation of $659 billion. This will help address the long-term global needs for reserve assets and provide a substantial liquidity boost to all our members especially the most vulnerable.
The MD who made a public presentation of the 2021 IMF Global Policy Agenda tasked Central Banks across the globe on how to use their monetary mandates to assist the world take a shot at an early recovery from the effects of the COVID-19 on the global economy.
She said. “The key is to support vulnerable households so long as the crisis is with us. This requires targeted fiscal measures and maintaining favourable financial conditions.
“Given divergent recoveries, we need careful communications by major Central Banks and we prudent policies in emerging and developing countries to minimise harmful financial spillovers.”
She said that once the health crisis was over, governments should scale back support programmes and scale up targeted subsidies, retraining and re-skilling.
“This is particularly important for low-skilled workers, youth and women who have borne the brunt of the crisis. Viable small businesses need more help through equity injections and better restructuring procedures. And once the recovery is firmly underway, governments need to ground fiscal policies in credible medium-term frameworks,” she added.
The MD observed that the pandemic crisis has continued to cast a dark shadow, stressing, “Economic fortunes are divergent dangerously. A small number of advanced and emerging economies led by the US and China are powering ahead, weaker and poorer countries are falling behind in this multi-speed recovery.
“We also face extremely high uncertainty, especially over the impact of new virus strains and a potential shift in financial conditions. And there is the risk of further economic scurrying from job losses, bankruptcies, extreme poverty and hunger.
“Policymakers must take the right actions now, by giving everyone a fair shot, not just into people arms but also into people’s lives and in vulnerable economies.
While presenting the IMF Global Policy Agenda to the public, she said that the world “a fair shot of the vaccine.”
She called for rapid vaccines production and distribution while charging countries where such vaccines are being produced to avoid export controls.
The IMF boss urged developed economies to make good their commitment to fully fund the COVAX facility and ensure that “surplus vaccines are transferred to poorer countries. This year and next, vaccines policy is economic policy.
“Fastest progress in ending the health crisis could add almost $ 9 trillion to the global economy by 2025. The big value of money by our times but this window of opportunity is closing fast. The scientists have given us vaccines in record time. Now the governments must also show the same sense of urgency and collaboration to provide vaccines to everyone everywhere.”
The IMF also recommended a heavy investment in the future by every government.
She said, “This is perhaps the most consequential decision that any government can make this year. The focus should be on scaling up public investment in green projects, in digital infrastructure, in people’s health and education to ensure that everyone can benefit from the historic transformation to green and smarter economies.
To unlock this potential, every economy needs sufficient public revenues and more efficient spending. In many cases, this would mean more progressive taxation and an agreement on questions like minimum taxation for companies and tax rights. This has to be coupled with stronger support for poorer countries as they fight the crisis and seek to invest in the future.”