Nigeria and 89 other global economies have indicated interest to borrow at least $100 billion emergency fund from International Monetary Fund (IMF).
IMF Managing Director, Kristalina Georgieva who disclosed this yesterday said the Fund has $1 trillion lending capacity, but the loan request by 90 countries are presently put at $100 billion.
Speaking in an online broadcast posted on the Fund’s website, with theme: ‘Confronting the Crisis: Priorities for the Global Economy’ she said the Fund has already approved loans for Kyrgyz Republic, Rwanda, Madagascar, and Togo—with many more to come. The fund is to enable the countries reduce the impact of the COVID-19 pandemic on their economies.
She explained that together with the World Bank, IMF is calling for a standstill of debt service to official bilateral creditors for the world’s poorest countries.
Ms. Georgieva said that COVID-19 pandemic has put emerging markets and low-income nations—across Africa, Latin America, and much of Asia—are at high risk.
“With weaker health systems to begin with, many face the dreadful challenge of fighting the virus in densely populated cities and poverty-stricken slums—where social distancing is hardly an option.
With fewer resources to begin with, they are dangerously exposed to the ongoing demand and supply shocks, drastic tightening in financial conditions, and some may face an unsustainable debt burden,” she said.
According to her, in the last two months, portfolio outflows from emerging markets were about $100 billion—more than three times larger than for the same period of the global financial crisis.
Commodity exporters are taking a double blow from the collapse in commodity prices. And remittances—the lifeblood of so many poor people—are expected to dwindle.
“We estimate the gross external financing needs for emerging market and developing countries to be in the trillions of dollars, and they can cover only a portion of that on their own, leaving residual gaps in the hundreds of billions of dollars. They urgently need help,” she added.
She said the Fund is working 24/7 to support member countries—with policy advice, technical assistance and financial resources. “We have $1 trillion in lending capacity and are placing it at the service of our membership.
We are responding to an unprecedented number of calls for emergency financing—from over 90 countries so far. Our Executive Board has just agreed to double access to our emergency facilities, which will allow us to meet the expected demand of about $100 billion in financing,” she said.
The IMF boss said it is reviewing tool kit to see how it might better use precautionary credit lines to encourage additional liquidity support, establish a short-term liquidity line, and help meet countries’ financing needs via other options—including the use of Special Drawing Rights (SDRs).
Ms. Georgieva said the Fund has revamped its Catastrophe Containment and Relief Trust to provide immediate debt relief to low-income countries affected by the crisis, thereby creating space for spending on urgent health needs rather than debt repayment.
The IMF boss said the world will overcome the COVID-19 challenge. “Our doctors and nurses are fighting it around the clock, often risking their lives to save the lives of others. Our scientists will come up with solutions to break COVID-19’s grip,” she said.
“Between now and then, we must marshal the determination of all—individuals, governments, businesses, community leaders, international organizations—to act decisively and act together, to protect lives and livelihoods.
These are the times for which the IMF was created—we are here to deploy the strength of the global community, so we can help shield the most vulnerable people and revitalize the economy. The actions we take now will determine the speed and strength of our recovery,” she said.