Speech

Meeting of Heads of State and Government ‘Financing for Development in the Era of COVID-19 and Beyond’

September 29, 2020

As prepared for delivery

My thanks to Secretary General Guterres, Prime Minister Holness and Prime Minister Trudeau.

Today, I will speak about the situation we are in, where are we headed, and what is required of us.

The situation today

Compared to May, the economic picture is less bleak. In the second quarter, performance in China and many advanced economies was better than we expected. And we see some green shoots of recovery in trade and parts of the global economy.

Where is this coming from? First and foremost, from decisive and synchronized action by governments and central banks that put a floor under the world economy, including $12 trillion dollars of fiscal support. We also saw a massive injection of liquidity by major central banks, and some emerging economies were able return to the markets to borrow.

At the IMF we leaned forward, and we have now provided close to 100 billion dollars to 81 countries to help them deal with this crisis.

We also see steps to control the pandemic through measures like wearing masks, and we are hopeful for vaccines, improved treatment, and more widely available testing.

Where we are headed

But we are not out of the woods, and while there are signs of recovery, it is partial, uneven and uncertain.

The situation is grave in many low-income countries – they have been hit hard by domestic contractions coupled with falling exports, declining remittances and low commodity prices.

And many small states are in difficulties due to the collapse of tourism.

Taken together, we are very concerned that this crisis will reverse progress towards the Sustainable Development Goals and up to 90 million people could fall back into poverty.

What is required of us?

So, more action is needed – with three priorities.

First, it is paramount to maintain public support for people and businesses until a durable exit from the pandemic is secured everywhere. Low-income countries and emerging markets with weaker fundamentals will need international support.

At the Fund, we are seeking to expand resources for concessional financing. This includes encouraging members with strong external positions to use their SDRs to help countries hard hit by the crisis. Several countries are already providing loan resources to the Poverty Reduction and Growth Trust using their SDR holdings and we continue to encourage other members to contribute resources.

Second, we have to zero in on high debt levels. The Debt Service Suspension Initiative is a good start, but we need to go further – and I urge the G20 to extend the DSSI. This would provide up to $12 billion of much needed debt service relief to participating countries.

We prioritize supporting countries’ efforts on debt management and debt transparency. For some low-income and emerging market countries, unsustainable debt levels are such that a restructuring may be required. We are keen to work with all parties to ensure any restructuring is done in an orderly fashion.

Third, we must use public support to build forward better and lay the foundations for the economy of tomorrow that is greener, smarter and more equitable.

It is up to us all to build forward better.

Thank you.