Near-term IMF funds are ample, but more may be needed
Monday, May 4, 2020
Subject
IMF funding dynamics.
Significance
The disruption caused by the COVID-19 pandemic is putting emerging markets (EMs) and low-income Countries (LICs) under economic and financial stresses. The IMF has long served as the world’s first responder to crises, and some 90 countries have already turned to it, raising fears of whether it has adequate resources to play a systemic role in helping to support these countries.
Impacts
- A second wave of COVID-19 infections and deaths would prolong the economic crisis and could sharply raise demands for IMF resources.
- The organisation needs a quota increase but the fastest way to raise more resources for EMs is by increasing bilateral borrowing.
- For low-income countries, additional IMF funding is being mobilised.