IMF says can help countries address economic impact of coronavirus
The International Monetary Fund (IMF) says that it is working closely with its development partners—World Bank, World Health Organization, and Asian Development Bank—and other health officials to provide timely policy advice, technical assistance, and financial support to help countries respond to the economic impact of the coronavirus.
In a statement, the IMF listed the facilities and instruments in its “toolkit” to help countries.
Emergency financing: The Rapid Credit Facility (RCF) and Rapid Financing Instrument (RFI) provide emergency financial assistance to member countries without the need to have a full-fledged program in place. These loans can be disbursed very quickly to assist member countries implement policies to address emergencies such as the coronavirus. In 2016, the IMF provided an RFI emergency loan to Ecuador after one of the strongest earthquakes in decades.
Augmenting existing lending programs: The IMF can modify as needed existing programs in support of countries to accommodate urgent new needs arising from the coronavirus. The IMF was the first international financial institution to swiftly provide additional financing for Guinea, Liberia, and Sierra Leone in 2014 to fight the Ebola outbreak. The IMF’s response helped these countries make room in their budgets for critical health spending, and served as a catalyst for donors, whose assistance was largely directed at health spending.
Grants for debt relief: The Catastrophe Containment and Relief Trust allows the IMF to provide grants for debt relief to the poorest and most vulnerable countries with outstanding obligations to the IMF to help address disasters, including public health disasters. This facility was used to support Guinea, Liberia, and Sierra Leone during the 2014 Ebola outbreak.
New financing arrangement: The IMF can also provide support through a new financing arrangement under its existing facilities such as Stand-By Arrangements, although some of the tools listed above would generally be preferable, including because they can be disbursed quickly to address the urgent financial need.
“The IMF will continue to support vulnerable countries through capacity development. Given the need to quickly redirect public resources, the IMF will remain closely engaged with the affected member countries and development partners, working as needed to reprioritize capacity development activities,” the statement said.
(Photo: Bruno Sanchez Andrade)