Speech

“We Must Take the Right Actions Now!”—Opening Remarks for Annual Meetings Press Conference

October 14, 2020

Introduction and Outlook

Welcome to our virtual 2020 Annual Meetings!

Reflecting on what is in front of us during these Meetings, I recall the words of the Russian poet Apollon Maykov: “The darker the night, the brighter the stars.”

Nine months into the pandemic, we are still struggling with the darkness of a crisis that has taken more than a million lives, and driven the economy into reverse, causing sharply higher unemployment, rising poverty, and the risk of “a lost generation” in low-income countries.

The picture over the last few months has become less dire, yet we continue to project the worst global recession since theGreat Depression. Growth is expected to fall to -4.4 percent this year. And over the next five years, the crisis could cost an estimated $28 trillion in output losses.

At the same time, we can see stars shining above us. We see unprecedented efforts in vaccine development and treatment. We see extraordinary and coordinated fiscal and monetary measures putting a floor under the world economy. And the world is starting to learn how to live with the virus.

While there is tremendous uncertainty around our forecast, we project a partial and uneven recovery in 2021, with growth expected at 5.2 percent.

As I said in my curtain raiser speech, all countries now face a “Long Ascent”—a journey that will be difficult, uneven, uncertain, and prone to setbacks. Think of how the virus is resurging in a number of countries.

So, what is the path forward?

Policy Recommendations

A crisis like no other calls for recovery like no other. In our Global Policy Agenda, which we are releasing today, we outline the measures we believe are needed to overcome the crisis and build a brighter future. Let me highlight three priorities:

(1) First—continue with essential measures to protect lives and livelihoods. A durable economic recovery is only possible if we beat the pandemic everywhere. Stepping up vital health measures is imperative. As is fiscal and monetary support to households and firms. These lifelines—such as credit guarantees and wage subsidies—are likely to remain critical for some time, to ensure economic and financial stability. Pull the plug too early, and you risk serious, self-inflicted harm.

(2) Second—build a more resilient and inclusive economy. Our new research shows that public investment—especially in green projects and digital infrastructure—can be a game changer. It has the potential to create millions of new jobs, while boosting productivity and incomes. Supporting workers as they transition to new jobs is another key element of a more resilient and inclusive future. This is particularly important for women and young people, who have been disproportionately affected by the crisis.

(3) Third—deal with debt. Global public debt is projected to reach a record high of 100 percent of GDP in 2021. This is partly because countries need to boost spending to fight the crisis and secure the recovery. Addressing this issue over the medium-term will be critical. But for many low-income countries, urgent action is required now. Given their heavy debt burdens, they are now struggling to maintain vital policy support. They need access to more grants, concessional credit, and debt relief.

More than ever, we need strong international cooperation—especially on vaccine development and distribution. Faster progress on medical solutions could speed up the recovery; it could add almost $9 trillion to global income by 2025. Which, in turn, could help narrow the income gap between poorer and richer nations.

The Role of the IMF

Since the pandemic began, the IMF has been pressing ahead with full force and commitment—with our policy advice, capacity development, and financial resources.

We have reached over $280 billion in lending commitments—more than a third of that approved since March. We still have substantial resources from our $1 trillion lending capacity to help support our members.

We have provided financing to 81 countries. We have extended debt service relief for our poorest members. We have have mobilized an additional $21 billion to support lending on concessional, zero-interest, terms. It helps us to gear up for the next phase — support for the recovery—and we are considering options to further adapt our lending toolkit.

Let me conclude with a line from Fyodor Dostoevsky, who wrote: “Only one thing matters—to be able to dare!”

We must dare to face our most daunting challenge together; we must dare to take the right actions now.

With that, I am happy to take your questions.