The International Monetary Fund has stated that it is ready to utilize its $1 trillion lending capacity to help the global community respond to the spread of the COVID-19. The IMF's lending capacity will be used helping countries that are struggling to mount a proper response.
According to IMF Managing Director Kristalina Georgieva, over 20 countries have queried the IMF about receiving aid to help stymie the economic blowback from the rapid spread of the coronavirus across the globe. The economic downturn is hampering efforts by some countries; in response, Georgieva called for a strong coordinated response to stem the economic effects of the virus.
"As the virus spreads, the case for a coordinated and synchronized global fiscal stimulus is becoming stronger by the hour," said Georgieva.
The IMF currently has outstanding agreements with 40 countries, valued at roughly $200 billion. Some of these countries are requesting additional loans to help with local Coronavirus efforts. However, many of the 20 or so countries asking for the IMF's assistance do not currently have any agreements in place with the lender. For these countries, Georgieva said the most readily available option would be a $50 billion load to help ease the immediate effects of the global economic downturn.
Georgieva, in an article on the IMF blog, suggested a comprehensive approach like the response to the 2008 market crash to address the pandemic related economic spiral properly. Among Georgieva's suggestions were expanding response policies to cover increased paid sick leave for employees and tax relief programs aimed at the most affected groups. Georgieva also suggested a coordinated response by central banks and treasuries, citing the U.S. Federal Reserve's interest rate cuts and policy adjustments in the wake of the virus' impact on the U.S. economy.
Georgieva lauded the opening of swap lines by central banks but cited that such efforts must also be open to developing countries with emerging markets, which are suffering particularly acute blowback from the economic downturn.