IMF provides $50bn to fight coronavirus outbreak

IMF managing director Kristalina Georgieva

INTERNATIONAL DESK: The International Monetary Fund has announced $50bn (£39bn) of support for countries hit by the coronavirus reports BBC.

The organisation also warned that the outbreak had already pushed this year’s global economic growth below last year’s levels.

The emergency measure came after the virus has spread rapidly outside China to more than 70 countries.

This week governments and central banks around the world have taken action to ease the impact of the virus.

The IMF said it is making the money available to help poor and middle-income countries with weak health systems respond to the epidemic.

At the same time the fund said the spread of the coronavirus has erased expectations of stronger economic growth this year, and will push 2020 global output gains to their slowest rate since the financial crisis in 2008.

But IMF managing director Kristalina Georgieva warned that it is hard to forecast just how big the effect will be: “Global growth in 2020 will dip below last year’s levels, but how far it will fall and how long the impact will be is still difficult to predict”.

She also declined to say whether the escalating health crisis could push the world economy into a recession.

It is the latest move by global financial bodies, world governments and central banks to protect economies from the impact of the outbreak.

On Tuesday the US central bank slashed interest rates in response to mounting concerns about the economic impact of the coronavirus.

In its first emergency rate cut since the 2008 financial crisis the US Federal Reserve lowered its benchmark rate by 50 basis points to a range of 1% to 1.25%.

Earlier the same day, both Australia and Malaysia cut interest rates in response to the outbreak. At the same time finance ministers from the G7 nations pledged to use “all appropriate policy tools” to tackle the economic impact of coronavirus.

Also this week the World Bank committed $12bn (£9.4bn) in aid for developing countries grappling with the spread of the coronavirus. The emergency package included low-cost loans, grants and technical assistance.

“What we’re trying to do is limit the transmission of the disease,” World Bank Group President David Malpass told the BBC.

In the UK, expectations are growing that the Bank of England could soon follow the Fed by announcing a rate cut, while new chancellor, Rishi Sunak, may use next week’s budget to announce financial support for British businesses as they deal with the coronavirus outbreak.