Global governments must work together to provide massive spending, such as in the 2008 financial crisis, to help the economy survive the damage from the coronavirus pandemic, said International Monetary Fund (IMF) chief Kristalina Georgieva on Monday.
Emerging markets are facing massive cash outflows and will also need support, she said in a blog post.
It again promised that the IMF was "ready to mobilize its $ 1 trillion credit capacity to help our membership," including $ 50 billion in rapidly deployed funds for emerging and developing countries.
Governments have taken some steps, particularly to address health efforts to curb the spread of COVID-19, but they should "continue and expand these efforts to reach the most affected people and businesses, with measures such as increased sickness pay and more targeted measures Tax relief. "Said Kristalina Georgieva.
However, more is needed beyond individual country action, and "with the spread of the virus, the argument for a coordinated and synchronized global fiscal stimulus is becoming stronger by the hour."
In 2009 alone, the countries in the 20-member group committed two percent of GDP or over $ 900 billion. "So there's a lot more to do," she said.
Meanwhile, the U.S. Federal Reserve teamed up with the European Central Bank and others on Sunday to provide dollar swap lines to ensure that global financial markets have access to enough cash to continue working. "Steps that we know worked before," she said. In addition, emerging markets are likely to need support as well.
She cited data from the global banking group, Institute of International Finance, that shows investors have withdrawn nearly $ 42 billion from emerging markets since the crisis began.
"This is the largest drain they have ever recorded," she said. "Swap lines to emerging markets may be required in the future."
Central banks in countries facing financial market stress can use foreign exchange intervention as well as "cash flow management" – a term that can refer to limits for removing cash from the country – as a useful tool to complement other measures. She said.
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