Over 100 countries seek IMF rapid financing instrument as covid-19 ravages economies
Over a hundred countries have approached the International Monetary Fund (IMF) for emergency support under its rapid financing instrument, as calls heighten to ramp up crisis response for emerging markets and developing countries to enable them combat impact of coronavirus pandemic.
IMF Managing Director Kristalina Georgieva, noted this on Wednesday as G20 Finance ministers and Central Banks governors met as part of the ongoing World Bank and IMF virtual spring meetings.
“We doubled annual access limits for emergency financing.
“Over 100 countries have already approached us and by the end of this month half of the requests will have been approved by our Board.
“Ten countries have already received emergency assistance,” Georgieva noted.
The Fund is also set to provide some US$11 billion to 32 sub-Saharan countries that have requested assistance in recent weeks, with disbursements already made to Burkina Faso, Chad, Gabon, Ghana, Madagascar, Niger, Rwanda, Senegal, and Togo.
Nigeria has also requested for all its existing holding with the Fund, totaling $3.4bn and according to finance minister, Zainab Ahmed is expected in coming weeks.
Last Monday, IMF Board granted immediate relief for debt service to 25 countries and is discussing a new short-term liquidity line for countries with strong policies.
Georgieva said the IMF “will need to step up even more”, as it projects a deep recession in 2020 and only a partial recovery in 2021.
Georgieva assured on the Fund preparedness to use its full toolbox and $ 1 trillion firepower, mindful of the need to use programs wisely and strengthen good governance to help countries steer through the depth of the recession and support recovery.
She also said to assist low income member countries, the IMF plans to triple its concessional lending and is urgently seeking US$18 billion in new loan resources for the Poverty Reduction and Growth Trust, and will also likely need at least US$1.8 billion in subsidy resources.
The Fund will also explore whether the use of SDRs could be helpful.
Meanwhile, IMF sees covid-19 pandemic as an unprecedented threat to development in Africa and projects sub-Saharan Africa economy will shrink by 1.6 percent in 2020, while real per capita income could fall by even more — 3.9 percent on average.
In its latest Regional Economic Outlook for Sub-Saharan Africa also released on Wednesday, the fund notes the covid-19 crisis threatens to reverse recent development progress across the region and may weigh on growth for years to come.
“The world is facing a serious challenge, and sub-Saharan Africa will not be spared,” Abebe Aemro Selassie, Director of the IMF’s African Department said during a video conference.
“All indications are that the Covid-19 pandemic will exert a heavy human toll and cause an acute economic crisis.”
The region is facing plummeting global growth, tighter financial conditions, a sharp decline in key export prices, and severe disruptions to economic activity from the measures that have had to be adopted to limit the viral outbreak.
“Consequently, we now project the region will shrink by 1.6 percent this year—the worst outcome on record,” Selassie stated, and according to him, “shrinking incomes will worsen existing vulnerabilities, while containment measures and social distancing will inevitably jeopardize the livelihoods of countless people.
Selassie said the pandemic is reaching the continent at a time when many countries have little room for maneuver in their budgets, making it more difficult for policymakers to respond.
Against this backdrop, Selassie called for decisive measures to limit the human and economic costs of the crisis.
He said first and foremost, “the immediate priority is to do whatever it takes to ramp up public health spending to contain the outbreak, regardless of a country’s budget.”
A second policy advice is on a substantial and timely support, including cash transfers or in-kind support to vulnerable households, informal workers as well as targeted and temporary support to hard-hit sectors depending on how much concessional funding countries can access from the international community.
He added that monetary and financial policy can also play an important role in sustaining firms and jobs, noting that a coordinated effort by all development partners will be key.
“This is an unprecedented crisis…our member countries need us now more than ever.
“Together with our partners, we aim to help the region smooth the worst of this shock, ensuring that peoples’ lives and livelihoods are not destroyed forever,” he assured.
Onyinye Nwachukwu, Abuja