As the Coronavirus continues to spread worldwide International Monetary Fund has committed to supporting member countries especially the most vulnerable with tools and funds as well as through close coordination with partner institutions.
What We, IMF, Know
We know that the disease is spreading quickly. With over one-third of our membership affected directly, this is no longer a regional issue—it is a global problem calling for a global response.
We also know that it will eventually retreat, but we don’t know how fast this will happen.
We know that this shock is somewhat unusual as it affects significant elements of both supply and demand:
- Supply will be disrupted due to morbidity and mortality, but also the containment efforts that restrict mobility and higher costs of doing business due to restricted supply chains and a tightening of credit.
- Demand will also fall due to higher uncertainty, increased precautionary behavior, containment efforts, and rising financial costs that reduce the ability to spend.
- These effects will spill over across borders.
How to Respond at the Country Level
The number one priority in terms of fiscal response is ensuring front-line health-related spending to protect people’s wellbeing, take care of the sick, and slow the spread of the virus. I can’t emphasize enough the urgency of stepping up health-related measures—and the need to ensure the production of medical supplies so that supply is at par with demand.
Second, macro-financial policy actions may be required to tackle the supply and demand shocks that I mentioned above. The aim should “no regret” actions that shorten and soften the economic impact. They should be timely and targeted to the sectors, businesses, and households hardest hit.
How the Fund Can Help
For our part, the Fund is ready to help its membership. The IMF is making available about $50 billion through its rapid-disbursing emergency financing facilities for low-income and emerging market countries that could potentially seek support. Of this, $10 billion is available at zero interest for the poorest members through the Rapid Credit Facility.
There are many members at risk, including those with weak health systems, inadequate policy space, commodity exporters exposed to terms-of-trade shocks, and others that are particularly vulnerable to spillovers.
I am particularly concerned about our low-income and more vulnerable members—these countries may see financing needs rise rapidly as the economic and human cost of the virus escalates.
Our staff are currently working on identifying vulnerable countries and estimating potential financing needs should the situation deteriorate further.
For all information known on the virus and IMF interventions the global body is happy to share the new page on IMF.org for all Fund material on COVID-19. It includes news, blogs, videos, and FAQs, among others. You can access the page through either URL: www.imf.org/coronavirus and www.imf.org/covid19