IMF urges governments to take action to protect businesses 

IMF urges governments and central bankers to take action to protect businesses

The International Monetary Fund has piled pressure on governments and central bankers around the world to do more to combat the economic fallout of Covid-19.

With Rishi Sunak delivering his first Budget tomorrow – after being appointed Chancellor last month – the Washington-based watchdog called for ‘targeted policies’ to help embattled households and businesses.

Having already pledged £39billion in emergency funds to help struggling economies, the IMF warned of the ‘acute shocks’ inflicted by the disease, which it expects to drag down global growth.

In a blog, the director of the IMF’s research department Gita Gopinath (pictured) pleaded with authorities to step in

These include a dramatic slump in supply as factories are shut and workers stay at home, as well as a fall in demand as nervous households and businesses rein in their spending. 

As economists from the United Nations claimed Covid-19 could trigger a £760billion hit to the global economy, tipping it into recession, the IMF also sounded the alarm. 

It warned ‘the loss of income, fear of contagion and heightened uncertainty will make people spend less’.

It added: ‘Workers may be laid off, as firms are unable to pay their salaries.’

Spelling out the economic damage already caused by the virus, it said that the drop in China’s services sector appears even larger than during the global financial crisis, ‘reflecting the large impact of social distancing’, as people are urged to self-isolate at home.

In a blog, the director of the IMF’s research department Gita Gopinath pleaded with authorities to step in. 

She said: ‘Considering that the economic fallout reflects particularly acute shocks in specific sectors, policymakers will need to implement substantial targeted fiscal, monetary and financial market measures to help affected households and businesses.’

She added that those ‘hit by supply disruptions and a drop in demand could be targeted to receive cash transfers, wage subsidies and tax relief, helping people to meet their needs and businesses to stay afloat’.

Central banks, she argued, should also be ready to ‘provide ample liquidity’ to banks so they can continue lending to struggling small firms’.

Bank of England governor Mark Carney, and Andrew Bailey, who will replace him next Monday, have already hinted at plans to slash interest rates. 

Bailey has told MPs he has been in talks with the Chancellor about emergency measures to support small firms. 

These will be laid out in the Budget, with the Government expected to commit billions to tackling the coronavirus crisis.


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