I do not understand the international monetary fund and how it works. As we all know here, economies are very affected by this "P". That said, I made myself read this to start to even though how it works is Greek to me, as I did with the virus at the beginning and now understand so much more. Perhaps financial folks here to help us?
IMF Makes Available $50 Billion to Help Address Coronavirus
I will start by setting out why I felt it was necessary to have this call:
- First, to place our scenarios about the potential impact on the global economy in the context of what we know and what we don’t yet know about the coronavirus;
- Second, to concentrate on a framework for how to think about the shock and how we – the membership, the Fund, and other global institutions – can support those affected by this crisis in an effective and coordinated way; and
- Third, in that spirit of cooperation to learn from each other, especially from those most exposed to the outbreak.
What We 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.
Experience suggests that about one-third of the economic losses from the disease will be direct costs: from loss of life, workplace closures, and quarantines. The remaining two-thirds will be indirect, reflecting a retrenchment in consumer confidence and business behavior and a tightening in financial markets.
The good news is that financial systems are more resilient than before the Global Financial Crisis. However, our biggest challenge right now is handling uncertainty.
Under any scenario, global growth in 2020 will drop below last year’s level. How far it will fall, and for how long, is difficult to predict, and would depend on the epidemic, but also on the timeliness and effectiveness of our actions.
The Fund has resources available to support the membership
- Thanks to the generosity of our shareholders, we have about $1 trillion in overall lending capacity.
- For low-income countries, we have rapid-disbursing emergency financing of up to $10 billion (50 percent of quota of eligible members) that can be accessed without a full-fledged IMF program.
- Other members can access emergency financing through the Rapid Financing Instrument. This facility could provide about $40 billion for emerging markets that could potentially approach us for financial support.
- We also have the Catastrophe Containment and Relief Trust – the CCRT – which provides eligible countries with up-front grants for relief on IMF debt service falling due. The CCRT proved to be effective during the 2014 Ebola outbreak