IMF chief asks G20 countries to help double financing capacity as COVID-19 grips global economy

International Monetary Fund (IMF) Managing Director Kristalina Georgieva said on Thursday the challenge posed by COVID-19 is enormous and demands strong action, asking Group of Twenty (G20) countries to help double IMF emergency financing capacity.

"It is paramount we recognize the importance of supporting emerging market and developing economies to overcome the brunt of the crisis and help restore growth," Georgieva made the remarks during a conference call of the Extraordinary G20 Leaders' Summit, according to a statement released after the conference.

"They find themselves particularly hard hit by a combination of health crisis, sudden stop of the world economy, capital flight to safety, and -- for some -- sharp drop in commodity prices," the IMF chief said. "These countries are the main focus of our attention."

Despite IMF's 1-trillion-dollar financial capacity and its close work with the World Bank and other international financial institutions, Georgieva said the challenge is "enormous."

"Exceptionally large number of countries" simultaneously require IMF emergency financing, emerging markets are "dramatically impacted" by record high capital outflows and severe shortage of foreign exchange liquidity, and many low income countries step into this crisis "under a high burden of debt," she said.

"We must act at par with the magnitude of the challenge," she said. "For us at the IMF it means working with you to make our crisis response even stronger."

The IMF chief urged G20 countries to help the multilateral lender double its emergency financing capacity, boost global liquidity through a sizable Special Drawing Right allocation, and support action of official bilateral creditors to ease the debt burden of the IMF's poorest members during a global downturn.

In response to the mounting economic fallout of COVID-19, the IMF announced earlier this month it is making available about 50 billion U.S. dollars through its rapid-disbursing emergency financing facilities for low-income and emerging market countries, and 10 billion dollars of that is intended to support the poorest members at zero interest.

The IMF's Catastrophe Containment and Relief Trust (CCRT), which is another instrument for very poor countries to help them cover debt service coming due to the IMF, now has about 400 million dollars available. The IMF aims to raise that to over 1 billion dollars.

Noting that the IMF projects a contraction of global output in 2020, and recovery in 2021, Georgieva said "how deep the contraction and how fast the recovery depends on the speed of containment of the pandemic and on how strong and coordinated our monetary and fiscal policy actions are."

The IMF chief lauded the "extraordinary steps" taken by G20 leaders to save lives and safeguard economies, especially highlighting the targeted fiscal support to vulnerable households and to large and small businesses, so that "they can stay afloat and get quickly back to work."

"Such support will accelerate the eventual recovery, and put us in a better condition to tackle challenges such as debt overhangs and disrupted trade flows," Georgieva said.

"We will get through this crisis together," she said. "Together we will lay the ground for a faster and stronger recovery."