The International Monetary Fund (IMF) has listed its top economic priorities for 2021, including getting private and public financial institutions, to restructure national debts for low income countries.
Its Managing Director Kristalina Georgieva said for low-income countries, fiscal support has only reached the equivalent of two per cent of Gross Domestic Product (GDP). This disparity threatens to widen the gap even further.
She said two important actions on this front would involve pressing private and public lenders to engage in debt restructuring when necessary and to provide more grants and concessional financing, especially in the areas of digital infrastructure and climate resilience.
She said advanced economies have been able to deploy the equivalent of 20 per cent of Gross Domestic Product (GDP) in fiscal support.
The Fund also laid out three key priorities for the year: Pursue a durable exit from the crisis, ensure a sustainable and inclusive recovery, and halt and reverse a growing divergence between rich and poor countries.
“We are still faced with tremendous uncertainties about the exit from the health crisis and we do have a difficult period ahead. There is scarring from [it] we are yet to address. And inequalities within and across countries are on the rise. We also have incredible opportunities for structural transformation that we need to absolutely pursue,” she said in a report on global economies released at the weekend.
On the first priority, Georgieva cautioned that vaccination of the global population will be an uneven process. International cooperation would be necessary, including full funding of COVAX, a global initiative to ensure fair and equitable access to COVID-19 vaccines.
“This is what we can gain between now and 2025, if we accelerate vaccination across the world. Of this, 60 percent would go to low income countries and emerging markets and 40 percent would go to advanced economies.”
On the sustainable and inclusive policies, she said a sustainable and inclusive recovery will require coordinated fiscal stimulus aimed at green and digital investment. Another important effort toward this goal will involve helping countries reduce high debt burdens and cope with volatile capital flows.
“We will continue to make the case for sustained policy support until the recovery is firmly underway, and a gradual move to more targeted assistance for the most vulnerable,” she said.
“We will also work with our members on the concept of resilient economies, accelerating the transition to the new digital and climate economy,” she said.
