TOUGH TIMES

IMF warns of worst recession on Covid-19 effects

To avoid this happening, many countries have taken far-reaching measures to address the health crisis and to cushion its impact on the economy

In Summary
  • On Friday, the G20 reported fiscal measures totaling $5 trillion or over six per cent of global GDP. 
  • Kenya placed its request via Central Bank on Thursday.
The International Monetary Fund (IMF) logo is seen at the IMF headquarters building during the 2013 Spring Meeting of the International Monetary Fund and World Bank in Washington, April 18, 2013. Photo/REUTERS
The International Monetary Fund (IMF) logo is seen at the IMF headquarters building during the 2013 Spring Meeting of the International Monetary Fund and World Bank in Washington, April 18, 2013. Photo/REUTERS

The world has entered the worst recession than that of 2009, the International Monetary Fund IMF has said.

Addressing the governing body of the IMF—the International Monetary and Financial Committee (IMFC) on Saturday, IMF managing director Kristanila Georgieva said a sizeable rebound is expected in 2021, but only if the world succeeds with containing the coronavirus – everywhere - and prevent liquidity problems from becoming a solvency issue.

''We have reassessed the prospect for growth for 2020 and 2021. It is now clear that we have entered a recession – as bad as or worse than in 2009. We do project recovery in 2021,’’ Georgieva said.

She said that a key concern about a long- lasting impact of the sudden stop of the world economy is the risk of a wave of bankruptcies and layoffs that not only can undermine the recovery but also can erode the fabric of our societies. 

To avoid this happening, many countries have taken far-reaching measures to address the health crisis and to cushion its impact on the economy – both on the monetary and on the fiscal side.

On Friday, the G20 reported fiscal measures totaling $5 trillion or over six per cent of global GDP. 

To support this, Georgieva said IMF has launched a policy action tracker for 186 countries to see who is doing what.

''We will be updating this information regularly and will provide country-specific analysis in line with our surveillance mandate,’’ she said.

The international lender revealed that seen an extraordinary spike in requests for IMF emergency financing – with 80 countries already placed requests and more are likely to come.

Kenya placed its request via Central Bank on Thursday.