Sat, Apr 10, 2021 page10

• IMF says more global funding needed

  RICH V POOR: Officials said the COVID-19 pandemic offers a vehicle to accelerate investment in green projects and ‘limit the long-term threat from climate change’

  • AFP, WASHINGTON
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  Policymakers must continue to spend money to shore up the global economy and ensure that no one is left behind, the IMF said on Thursday, warning that the recovery from the COVID-19 pandemic is not yet over.

  Without that aid, and additional financing from the IMF and the World Bank, developing nations and poor people in many countries could struggle to rebound from the downturn, the IMF said at the conclusion of its spring meeting.

  Continued support is needed to “mitigate and heal economic scars,” IMF managing director Kristalina Georgieva told reporters. “We want to make sure everybody has a fair shot to a better life.”

  

  IMF Managing Director Kristalina Georgieva speaks at a news conference ahead of the World Economic Forum in Davos, Switzerland, on Jan. 20 last year.

  Photo: Reuters

  That means accelerating access to vaccines and taking advantage of the opportunity presented by the pandemic to invest in green technology, which can create good paying jobs and address climate change, she said.

  US Secretary of the Treasury Janet Yellen joined the call, urging “significant” new spending to ensure a solid rebound.

  While the economic outlook has “improved significantly,” especially due to substantial government support, “the job is not yet done, given high uncertainty and the risk of permanent scarring,” Yellen said.

  “I urge major economies to not just avoid removing support too early, but to strive to provide significant amounts of new fiscal support to secure a robust recovery,” she said.

  The IMF now projects global growth of 6 percent this year after a 3.3 percent contraction last year, and credited the US$16 trillion in global public spending during the pandemic with keeping the worst peacetime recession in a century from being three times as severe.

  However, Georgieva warned about a “dangerous divergence” in low-income countries’ prospects compared with rich nations, which could worsen if advanced economies such as the US raise interest rates sooner than expected.

  She praised the IMF members who agreed to allow the fund to issue US$650 billion in new Special Drawing Rights, an additional pool of IMF currency that would add to nations’ reserves and boost their ability to access financing.

  The IMF is expected to present a proposal to its board in June, and Georgieva said that it is working with rich nations to shift some of their share of those reserves to help aid developing nations, which “face a crucial policy transition from crisis to recovery.”

  The officials again stressed that ending the pandemic remains central to the economic recovery, and the closing statement from the IMF Committee lamented “uneven access to vaccines.”

  The committee said that “strong international cooperation to accelerate vaccine production and support affordable and equitable distribution to all” was needed.

  The pandemic offers policymakers a vehicle to capitalize on the need for investments to accelerate green projects that can provide good-paying jobs, officials said.

  “Government efforts to support the recovery need to take advantage of the opportunity to accelerate the transition towards a low-carbon economy and limit the long-term threat from climate change,” Organisation for Economic Co-operation and Development Secretary-General Angel Gurria said.

  Georgieva said that those investments could create jobs in growing industries to replace those lost in sectors that are shrinking.

  “Climate risks are growing, and they are substantial for macroeconomic and financial stability, climate action can generate green growth and green jobs,” she said.

  The IMF and the World Bank have also announced plans to intensify the focus on green investment and climate-friendly aspects of their lending programs.
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