Managing director International Monetary Fund (IMF), Kristalina Georgieva said, 170 countries or almost 90 percent of the world, will be worse off with lower per capita income in this year - Photo by IMF Office

JAKARTA (TheInsiderStories) – Managing director International Monetary Fund (IMF), Kristalina Georgieva said, 170 countries or almost 90 percent of the world, will be worse off with lower income per capita in this year. This is a reversal of the IMF forecast that we made in January, when predicted that 160 countries would finish the year with larger economies, and positive per capita income growth.

“Never in our history have we seen such a tremendous reversal of fortunes for so many. And we have never had such a truly global crisis as the one we face now. We call the current period ‘the Great Lockdown’ because we are fighting a health emergency by bringing production and consumption to a standstill,” she told member of United States chamber of commerce on Tuesday (06/09).

She also saw massive fiscal measures, totaling US$9 trillion globally. This has provided a lifeline to many businesses, and she believe these measures to be well-targeted and well-thought through.

She asserted, “They are temporary and—as such—they are a bridge to the recovery, but not a risk to the recovery as it arrives. This shows us that governments can—in a synchronized manner—take decisive action at a time of crisis.”

She also noted, major central banks have also acted in a forceful manner. In the United States, the Federal Reserve has provided liquidity and helped bring down the temperature in markets. She continued, by taking decisive action domestically, major central banks and governments have eased the pressure on emerging markets with good fundamentals.

Giorgieva said, in March, around $100 billion left emerging markets and developing countries—three times more than during the global financial crisis. But in April and May—thanks to this massive injection of liquidity in advanced economies—some emerging markets were able to go back to the markets and issue bonds with competitive yields, with total issuance of around seventy-seven billion dollars. This is almost three and a half times as much as in the same two months last year.

“We can draw an important lesson from the fact that countries that have built buffers and sound macroeconomic policies have weathered the crisis much better than those who have not. Unfortunately, for countries in debt distress, affected by fragility and conflict or with bad underlying conditions, the crisis is terrible,” said the managing director.

She reported, after the Global Financial Crisis, the shareholders boosted the financial strength of the IMF. The Fund’ resources increased from $250 billion to $1 trillion.

Written by Staff Editor, Email: theinsiderstories@gmail.com