SOFIA (Reuters) – Developing countries may be the hardest hit economically by the coronavirus, International Monetary Fund managing director Kristalina Georgieva said on Monday, adding the IMF stands ready to help.
The IMF and the World Bank have appealed for rapid international action to help African countries and other emerging markets respond to the pandemic.[nL1N2C601H]
The IMF, with $1 trillion in lending capacity, has already approved emergency funding for 21 of 103 countries which have asked to for it and prepared different instruments to help its members, she said.
“The countries that are now worst hit by the pandemic are not necessarily the ones that will be worst hit economically. I am most worried about the developing and emerging countries,” she told a videoconference press briefing for the Bulgarian media.
“What worries me very much is the large capital outflows from the developing markets. Some $100 billion flew away because of fears linked to the uncertainty of this crisis and went where it is safer. We want to see this process reversed,” she said.
She said that the fiscal response to the pandemic in 193 countries had amounted to $8 trillion, while central banks had supported liquidity by another $6 trillion.
These measures should be enough if the crisis continues for months, but more will be needed if it goes on longer, she said.
Georgieva, who is Bulgarian, said the pandemic had triggered a global crisis that had forced 170 economies to contract.
“During the financial crisis ten years ago, part of the world managed to grow and pulled others up. Now, we all are in a situation of recession, almost with no exception, the growth is downwards,” she said.
Georgieva stressed that governments’ first goal should be to enhance their health systems to protect lives and take steps to prevent massive bankruptcies and long dole queues, but should not resort to protectionism in the recovery phase.
“It will be very, very important to try to avoid a full course towards protectionism and self-isolation, because this, without a doubt, will make us as a world poorer,” she said.
Reporting by Tsvetelia Tsolova; Writing by Jan Lopatka; Editing by Toby Chopra and Nick Macfie