The global economy will require additional financial stimulus measures to withstand the coronavirus (COVID-19) pandemic, International Monetary Fund (IMF) Managing Director Kristalina Georgieva said on Monday
WASHINGTON (Pakistan Point News / Sputnik - 16th March, 2020) The global economy will require additional financial stimulus measures to withstand the coronavirus (COVID-19) pandemic, International Monetary Fund (IMF) Managing Director Kristalina Georgieva said on Monday.
"Additional fiscal stimulus will be necessary to prevent long-lasting economic damage," Georgieva said in an IMF blog post about policy action during the global health crisis.
The IMF leader voiced support for "comprehensive containment measures," which will slow the rate of infection.
"Governments should continue and expand these efforts to reach the most-affected people and businesses - with policies including increased paid sick leave and targeted tax relief," she said. "Beyond these positive individual country actions, as the virus spreads, the case for a coordinated and synchronized global fiscal stimulus is becoming stronger by the hour."
Georgieva also noted the importance of relevant monetary policy. She called on the central banks of advanced economies to ease financial conditions and ensure the flow of credit to the real economy.
The IMF chief welcomed the US Federal Reserve announcement of further interest rate cuts and assets purchases. "Major central banks took decisive coordinated action on monetary easing and opening of swap lines to lessen global financial market stresses," she said.
Georgieva also urged worldwide financial regulators to maintain banking system soundness and sustain economic activity.
"Banks should be encouraged to use flexibility in existing regulations, for example by using their capital and liquidity buffers, and undertake renegotiation of loan terms for stressed borrowers," Georgieva said. "Risk disclosure and clear communication of supervisory expectations will also be essential for markets to function properly in the period ahead."
Last week, the main European indices saw their biggest percentage weekly fall ever, losing 17-23 percent by Friday close.
Central banks' efforts to stimulate the economy failed to improve the sentiment. The Bank of Canada, the Bank of England, the Bank of Japan, the European Central Bank, the US Federal Reserve and the Swiss National Bank made a coordinated decision to boost liquidity, reducing the rate on US dollar-denominated swaps by 25 basis points. The Bank of Japan (BOJ) also decided to increase its asset-buying program.
On Sunday, the US Federal Reserve cut its benchmark interest rate by 100 basis points to a range from 0 to 0.25 percent and pledged to buy $700 billion in government and mortgage-related bonds to soften the consequences of the coronavirus.
