In what ways did the International Monetary Fund help countries during the coronavirus crisis?

By Srirangam Sriram, Sriram's IAS, New Delhi.

The IMF has responded with financial assistance to help countries to protect the most vulnerable and set the stage for economic recovery and also by providing policy advice, financial support, capacity development, and debt relief for the poorest.

The Fund’s used the following channels:

1. Emergency financing– The IMF is responding to an unprecedented number of requests for emergency financing from over 100 countries. The Fund has temporarily doubled the access to its emergency facilities—the Rapid Credit Facility (RCF) and Rapid Financing Instrument (RFI) to help 76 countries. IMF has been also approving financial assistance under its other lending arrangements.
2. Grants for debt relief – The IMF has extended debt service relief through the Catastrophe Containment and Relief Trust (CCRT) to 29 of its poorest and most vulnerable member countries on their IMF obligations. This debt relief helps the benefitting countries channel more of their scarce financial resources towards vital emergency medical and other relief efforts while these members combat the impact of the COVID-19 pandemic.
3. Calls for bilateral debt relief – The IMF Managing Director and the President of the World Bank recognized the heavy burden this crisis is having on Low Income Countries and called on bilateral creditors to suspend debt service payments from the poorest countries. The G20 responded to this call on by agreeing to suspend repayment of official bilateral credit from the poorest countries until the end of 2020.
4. Enhancing liquidity– The IMF has approved the establishment of a Short-term Liquidity Line (SLL) to further strengthen the global financial safety.
5. Adjusting existing lending arrangements– The IMF is augmenting existing lending programs to accommodate urgent new needs arising from the coronavirus, thereby enabling existing resources to be channeled to the necessary spending on medical supplies and equipment and for containment of the outbreak.
6. Policy advice. As the IMF monitors economic developments and the impact of the pandemic at the global, regional, and country levels, it recommends policies needed to overcome the crisis, protect the most vulnerable and set the stage for economic recovery.
7. Capacity Development– In response to the pandemic, the IMF is providing real- time policy advice and capacity development to over 160 countries to address urgent issues such as cash management, financial supervision, cybersecurity and economic governance. In particular, the Fund has been working with tax administrations and budget offices in many countries to help them restore operations and strengthen support to businesses and individuals, without compromising safeguards and accountability. IMF technical experts are also working with countries to revise and update their debt management strategies. The IMF has made its online courses available to government officials and members of the general public with extended registration and completion timelines.

Published date : 15 Dec 2020 12:53PM