Central Banks Build $8trn War Chest Against COVID-19

Central Banks across the globe have built an $8 trillion war chest against the coronavirus pandemic.

This came as 102 countries have approached the International Monetary Fund (IMF) for emergency financing with half of them expected to receive the funds by the end of April.

IMF managing director, Kristalina Georgieva told the G20 Finance Ministers and Central Bank Governors’ meeting at the ongoing Spring Meetings of the IMF and World Bank that 10 of the requests for emergency funding had already been disbursed.

She said that to assist “our low income countries, we plan to triple our concessional lending.

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“We are, therefore, urgently seeking $18 billion in new loan resources for the Poverty Reduction and Growth Trust, and will also likely need at least $1.8 billion in subsidy resources.

“We will also explore whether the use of SDRs could be helpful in this context.

“We are today discussing a new short-term liquidity line for countries with strong policies.

“And we will need to step up even more. As you know, we project a deep recession in 2020 and only a partial recovery in 2021.

“To help countries steer through the depth of the recession and support their recovery, we are prepared to use our full toolbox and $1 trillion firepower, mindful of the need to use programmes wisely and strengthen good governance.

“We will concentrate both lending and policy support to reduce the scarring of the economy caused by bankruptcies and unemployment, in order to support a speedy recovery.

“And, with many economies continuing to face capital outflows and high debt, we are ready to work closely with other international institutions and fora, as well as private stakeholders, to help our members steer through this crisis and come out of it more resilient,” she said.

While expressing appreciation to the Saudi Presidency for steering the G20 in this unprecedented crisis, she said that $8 trillion of fiscal measures and ample liquidity by central banks have helped build a bridge to recovery for companies and households.

Georgieva said: “You stepped up with an initiative on a time-bound suspension of debt service payments for the poorest countries.

“I wholeheartedly welcome this timely action. You called on the Fund to ramp up our crisis response for emerging markets and developing countries. And we acted on this call.

“We doubled annual access limits for emergency financing. Over 100 countries have already approached us and by the end of this month half of the requests will have been approved by our Board.

“Ten countries have already received emergency assistance.

“This Monday our board granted immediate relief for debt service to the IMF to 25 countries.

“We thank members who have made generous pledges to this effort and call on others to contribute,” she said.