The IMF, in a coronavirus emergency conference call with G20 Finance Ministers and Central Bank Governors, has revealed that grim economic outlook for 2020 and what it could mean for low-income countries in debt distress, mostly in Africa.
Investors have already removed US$83 billion from emerging markets since the beginning of the crisis, the largest capital outflow ever recorded.
In a statement, International Monetary Fund (IMF) Managing Director Kristalina Georgieva, said:
“First, the outlook for global growth: for 2020 it is negative—a recession at least as bad as during the global financial crisis or worse. But we expect recovery in 2021.”
In order to dampen the impact, the IMF is offering the following solutions:
Prioritize containment and strengthen health systems – everywhere
Support and welcome the fiscal actions many countries have taken and the moves of major central banks to ease monetary policy
Massively step up emergency finance
Replenish the Catastrophe Containment and Relief Trust to help the poorest countries
Stand ready to deploy all our US$1 trillion lending capacity
Exploring a possible proposal that would help facilitate a broader network of swap lines, including through an IMF-swap type facility, with emerging market countries
Touching on the impact this will have on developing nations across the African continent, Georgieva said:
“Advanced economies are generally in a better position to respond to the crisis, but many emerging markets and low-income countries face significant challenges. They are badly affected by outward capital flows, and domestic activity will be severely impacted as countries respond to the epidemic.
Investors have already removed US$83 billion from emerging markets since the beginning of the crisis, the largest capital outflow ever recorded. We are particularly concerned about low-income countries in debt distress—an issue on which we are working closely with the World Bank.”