Coronavirus will weigh on some economies: IMF official
The coronavirus crisis is lasting longer than expected and it'll take some countries years to come back to growth, the No. 2 official at the International Monetary Fund said on Wednesday.
The Fund has provided some $90 billion altogether financing to 79 countries, including 20 in Latin America, since the start of health crisis, an IMF spokeswoman said.
It is continuing to utilize member countries how to support the pandemic and mitigate its economical impact, First Deputy Managing Director Geoffrey Okamoto told an online event hosted by the Centre for Strategic and International Studies.
"We're trying to preserve our financial firepower," Okamoto said. "We're discussing a ... return to growth that will take a few years, and many countries on the way that are probably going to need assistance."
Latin American and Caribbean economies will be the hardest hit on the globe by the pandemic, reporting around 8.4 million coronavirus cases, and more than 314,000 deaths, both figures being the highest of any region.
Okamoto told the function that Fund officials were in talks with the Group of 20 major economies about extending a non permanent halt in official bilateral debt service payments by low-income countries under the Debt Service Suspension Initiative (DSSI), and how exactly to kickstart private sector participation.
The G20 initiative approved in April expires at the end of the year, but experts and government officials in lots of countries have backed extending it into 2021, with a decision expected in coming weeks and months.
The issue could appear when finance ministers from the Group of Seven advanced economies meet online on Friday. In August, the ministers decided to consider extending the DSSI.
United Nations officials and others have urged the G20 to expand their efforts to include middle-income countries and island nations hit by the collapse of tourism.
The problem of debt sustainability was "top of mind" for Fund officials, Okamoto said, noting that many countries in Latin America had debt distress before coronavirus, which had exacerbated those pressures.
The DSSI is giving the IMF additional time to assess the entire debt picture for these countries, he said. "It's lasting longer than we anticipated, and in order that will probably change a bit the dynamics of what we think is sustainable in the long run."
He said the Fund was continuing to ask rich countries to invest in two specific Fund programmes that lend to poor countries.
AMERICA, the greatest shareholder in the IMF, has signalled it hopes to contribute, but no funds have already been provided for all those programmes so far.
