“The IMF and the World Bank Group stand ready to help our member countries address the human tragedy and economic challenge posed by the COVID-19 virus. We are engaged actively with international institutions and country authorities, with special attention to poor countries where health systems are the weakest and people are most vulnerable,” heads of the two institutions Kristalina Georgieva and David Malpass said in a joint statement on Monday.
“We will use our available instruments to the fullest extent possible, including emergency financing, policy advice, and technical assistance. In particular, we have rapid financing facilities that, collectively, can help countries respond to a wide range of needs. The strengthening of country health surveillance and response systems is crucial to contain the spread of this and any future outbreaks,” it said.
International cooperation is essential to deal with the health and economic impact of the COVID-19 virus. The IMF and the World Bank Group are fully committed to provide the support that people in our member countries expect from us.”
IMF said, a global health crisis, such as the coronavirus, inevitably can have an adverse economic impact, and it is part of the IMF’s mandate to assist countries through policy advice and lending.
The institution is working closely with its development partners—World Bank, World Health Organization, and Asian Development Bank—and other health officials to provide timely policy advice, technical assistance, and financial support.
The IMF has the following facilities and instruments in its toolkit to help countries respond to the economic impact of the coronavirus.
Emergency financing
The Rapid Credit Facility (RCF) and Rapid Financing Instrument (RFI) provide emergency financial assistance to member countries without the need to have a full-fledged program in place.
These loans can be disbursed very quickly to assist member countries implement policies to address emergencies such as the coronavirus. In 2016, the IMF provided an RFI emergency loan to Ecuador after one of the strongest earthquakes in decades.
Augmenting existing lending programs
The IMF can modify as needed existing programs in support of countries to accommodate urgent new needs arising from the coronavirus. The IMF was the first international financial institution to swiftly provide additional financing for Guinea, Liberia, and Sierra Leone in 2014 to fight the Ebola outbreak. The IMF’s response helped these countries make room in their budgets for critical health spending, and served as a catalyst for donors, whose assistance was largely directed at health spending.
Grants for debt relief
The Catastrophe Containment and Relief Trust allows the IMF to provide grants for debt relief to the poorest and most vulnerable countries with outstanding obligations to the IMF to help address disasters, including public health disasters. This facility was used to support Guinea, Liberia, and Sierra Leone during the 2014 Ebola outbreak.
The IMF can also provide support through a new financing arrangement under its existing facilities such as Stand-By Arrangements, although some of the tools listed above would generally be preferable, including because they can be disbursed quickly to address the urgent financial need.
The IMF will continue to support vulnerable countries through capacity development. Given the need to quickly redirect public resources, the IMF will remain closely engaged with the affected member countries and development partners, working as needed to reprioritize capacity development activities.
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