An exterior view of the building of the International Monetary Fund (IMF), with the IMG logo, is seen on March 27, 2020 in Washington, DC. – The coronavirus pandemic has driven the global economy into a downturn that will require massive funding to help developing nations, IMF chief Kristalina Georgieva said on March 27, 2020. (Photo by Olivier DOULIERY / AFP) (Photo by OLIVIER DOULIERY/AFP via Getty Images)
The coronavirus pandemic has brought the global economy to a standstill and plunged the world into a recession that will be “way worse” than the global financial crisis a decade ago, the head of the International Monetary Fund said on Friday.
IMF Managing Director Kristalina Georgieva, speaking at a rare joint news conference with the leader of the World Health Organization, called on advanced economies to step up their efforts to help emerging markets and developing countries survive the economic and health impact of the pandemic.
“This is a crisis like no other,” she told some 400 reporters on a video conference call. “We have witnessed the world economy coming to a standstill. We are now in recession. It is way worse than the global financial crisis” of 2008-2009.
More than 1 million people have been infected with COVID-19, the disease caused by the virus, and more than 53,000 have died, a Reuters tally showed on Friday.
Georgieva that the IMF was working with the World Bank and WHO to advance their call for China and other official bilateral creditors to suspend debt collections from the poorest countries for at least a year until the pandemic subsides.
She said China had engaged “constructively” on the issue, and the IMF would work a specific proposal in coming weeks with the Paris Club of creditor nations, the Group of 20 major economies and the World Bank for review at the annual Spring Meetings, which will be held online in about two weeks.
Emerging markets and developing economies were hard hit by the crisis, Georgieva said, noting that nearly $90 billion in investments had already flowed out of emerging markets, far more than during the financial crisis. Some countries were also suffering from sharp drops in commodity prices.
More than 90 countries — nearly half the IMF’s 189 members — have asked for emergency funding from the Fund to respond to the pandemic, she said.
The IMF and WHO have called for emergency aid to be used mainly to strengthen health systems, pay doctors and nurses and buy protective gear.
Georgieva said the Fund stood ready to use as much of its “war chest” of $1 trillion in financing capability as needed.
The IMF has begun disbursing funds to requesting countries, including Rwanda, with requests from two additional African nations to be reviewed on Friday, she said.
“This is, in my lifetime, humanity’s darkest hour – a big threat to the whole world – and it requires from us to stand tall, be united, and protect the most vulnerable of our fellow citizens,” she said.
She said central banks and finance ministers had already taken unprecedented steps to mitigate the effects of the pandemic and stabilize markets, but more work was needed to keep liquidity flowing, especially to emerging markets.
To that end, the Fund’s board in coming days would review a proposal to create a new short-term liquidity line to help provide funds to countries facing problems. She also urged central banks and particularly the U.S. Federal Reserve to continue offering swap lines to emerging economies.
In pictures: Coronavirus (COVID-19) outbreak around the world