The Managing director of International Monetary Fund (IMF), Kristalina Georgieva, has expressed her views that the organization needs to step out of its comfort zone going out of its way so as to help in cushioning global economic plunge caused by coronavirus pandemic.
According to a published post in the company’s website, Geirgieva says in the past few months IMF has disbursed over $100 billion to emerging markets and developing economies making it the ever highest cash outflow in within a period of time.
“But more resources might be needed if market pressures continued to mount, and lending even on easy terms was not always the best solution, given already high debt burdens faced by many countries,” said the MD.
According to the MD it’s high time for the body to venture into extra solutions including scaling up partnerships with other international bodies and the private sector.
“The IMF, like our member countries, may need to venture even further outside our comfort zone to consider whether exceptional measures might be needed in this exceptional crisis,” said Georgieva.
Her sentiments comes one week after IMF published another post indicating a number of countries among them, the 77 poorest had already been promised a suspension of debt payments on official bilateral loans, this development will be offer much needed debt relief during these hard times to these poor countries.
Additionally, the MD proposed for allocation of Special Drawing Rights (SDRs), which are supplementary foreign exchange reserve assets maintained by the IMF.
For the longest time, United States has been opposing SDR’s equating them to printing of extra cash by Central Bank in attempt of increasing money supply in the economy. Printing extra cash can only works if all other factors remain constant in the economy i.e. price levels, interest levels among others.
If not so, printing more cash could do more harm to an economy than good, like increased inflation rates and devaluation of currencies. This has always been the position of U.S since the SDR’s are same to printing extra cash.
“We stand ready to deploy our full lending capacity and to mobilize all layers of the global financial safety net, including whether the use of SDRs could be more helpful,” posted Georgieva.