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IMF urges ‘equity-like’ government support for virus-hit firms

International Monetary Fund Chief Economist Gita Gopinath urged governments to shift to “equity-like” support from one focused on loans as the coronavirus pandemic inflicts prolonged damage on companies. Gopinath said the massive scale of the shock meant more firms will become insolvent as they suffer lower revenues for many months. Government support in the form of loans would saddle such companies with huge debt, which would serve like a tax that makes it difficult for them to emerge from the crisis, she said. “Because there’s a bigger insolvency issue here, ...

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IMF calls for global fiscal reform after coronavirus crisis

The International Monetary Fund is concerned about rising debt in both emerging and advanced economies due to coronavirus stimulus spending, and it will urge countries to tackle fiscal reform once the pandemic ends, its deputy managing director Mitsuhiro Furusawa said. For the first time ever, global public debt is seen rising to above 100% of combined GDP after governments responded to the health crisis, Furusawa said. “Once the economy gets back on track, (a) medium to long-term fiscal framework must be created to manage public finances accordingly,” Furusawa told an ...

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IMF must fine-tune lending instruments for poorest states – Georgieva

The International Monetary Fund must improve its lending instruments for low-income countries, 72 of which it has provided with emergency funds during the coronavirus pandemic, its Managing Director Kristalina Georgieva said on Wednesday. Georgieva told an online debt conference that emerging markets with strong fundamentals issued $124 billion in bonds in the first six months of 2020, but others with poor fundamentals had no affordable access to capital markets. She said the Fund was working with member countries in advanced economies to shift some of their Special Drawing Rights – ...

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Urgent action needed to stop jobs crisis becoming a social crisis

The Covid-19 pandemic is turning into a jobs crisis far worse than the 2008 crisis. Women, young people and workers on low incomes are being hit hardest, according to a new OECD report and unemployment statistics released yesterday. The OECD unemployment rate edged down to 8.4% in May 2020, after an unprecedented increase of 3.0 percentage points in April, to 8.5%, the highest unemployment rate in a decade. In February 2020, it was at 5.2%. The number of unemployed people in the OECD area stood at 54.5 million in May. ...

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OECD annual inflation slowed to 0.7% in May 2020, driven by energy prices; food prices inflation continued to rise

Annual inflation in the OECD area slowed to 0.7% in May 2020, compared with 0.9% in April and 1.7% in March, on the back of the largest fall in energy prices since September 2009. Energy prices declined by a further (minus) 13.4% in May, following the contraction of (minus) 12.2% in April. By contrast, food price inflation picked up to 4.5%, compared with 4.2% in April, the largest annual increase since December 2011. Excluding food and energy, OECD inflation was stable at 1.6% in May 2020. Estimates for the OECD ...

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UK may need bigger safety net for jobless after lockdown – IMF

Britain should consider increasing its unemployment benefits to help get people into the kind of work that is likely to be in demand after the coronavirus lockdown, the chief economist of the International Monetary Fund said. Gita Gopinath told lawmakers in Britain’s parliament on Wednesday that the first priority for governments was to scale back gradually their support programmes for workers affected by the COVID-19 crisis, including state job retention schemes. Then, as governments seek to get people back to work, the focus should be on reallocating resources in the ...

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OECD: International community continues making progress against offshore tax evasion

The international community continues making tremendous progress in the fight against offshore tax evasion, as implementation of innovative transparency standards by the Global Forum on Transparency and Exchange of Information for Tax Purposes moves countries ever closer to the goal of eradicating banking secrecy for tax purposes. Nearly 100 countries carried out automatic exchange of information in 2019, enabling their tax authorities to obtain data on 84 million financial accounts held offshore by their residents, covering total assets of EUR 10 trillion. This represents a significant increase over 2018 – ...

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IMF revises down forecast for Asian economy, warns of “clouds on the horizon”

The International Monetary Fund (IMF) revised down its forecast for the Asian economy amid the mounting COVID-19 fallout, projecting a 1.6-percent contraction in 2020, and warning of “clouds on the horizon.” The latest projection is a downgrade to the forecast of zero growth in the April World Economic Outlook (WEO), indicating stronger global headwinds as the pandemic’s impacts continue to ripple throughout the world. “Projections for 2020 have been revised down for most of the countries in the (Asian) region due to weaker global conditions and more protracted containment measures ...

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IMF raises its forecast of Gulf economies contraction to 7.6% for 2020

The economy of the six-member Gulf Cooperation Council will shrink 7.6% in 2020, worse than April projections, due to weak oil prices and the coronavirus outbreak, an International Monetary Fund official said on June 30. The Gulf regions’ GDP was initially forecast to contract 2.7%, according to the IMF’s April projections. The GCC countries are Saudi Arabia, Kuwait, the UAE, Oman, Qatar and Bahrain. Growth is expected to return next year at a 2.5% pace, which will be among the highest economic recoveries the region will witness, Jihad Azour, the ...

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IMF’s Gopinath says private sector participation in G20 debt relief ‘essential’

Private sector participation will be essential to ensuring the success of a debt relief initiative launched by the Group of 20 major economies for the world’s poorest countries, the chief economist of the International Monetary Fund said. The G20’s offer to suspend collection of official bilateral debt service payments from the poorest countries would likely need to be extended beyond the end of the year, Gita Gopinath also told an online event hosted by the Center for Strategic and International Studies think tank. Source: Reuters (Reporting by Andrea Shalal; Editing ...

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India among outliers in economic support style, shows IMF report

The coronavirus pandemic and lockdowns in lieu of it has mounted the fiscal costs for governments across the world. By and large most countries have opted for direct fiscal stimulus with monetary support to rekindle economic activity. Advanced economies such as the US and European nations have been at the forefront of direct fiscal support. In terms of total economic support, India is fourth largest among G-20 nations, data from the International Monetary Fund (IMF) shows. Brazil has the largest size of economic stimulus plan at 12% of its gross ...

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IMF’s Georgieva says virus crisis could ultimately test $1 trillion war chest

International Monetary Fund Managing Director Kristalina Georgieva said that the global economic crisis spurred by the coronavirus could ultimately test the Fund’s $1 trillion in total resources, “but we’re not there yet.” Georgieva told a Reuters Newsmaker webcast event that it was now clear that an economic recovery would have to get underway without a medical breakthrough and the virus’ presence still widespread throughout the world. IMF member countries were standing by to provide more support to the Fund if necessary, she said. The IMF on Tuesday forecast a deeper ...

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IMF warns markets at risk of correction after run-up

Markets for stocks and other risky assets could suffer a second swoon if the coronavirus spreads more widely, lockdowns are reimposed or trade tensions surge again, the International Monetary Fund warned. Equity markets tailspinned into bear market territory in record time earlier this year as the virus and related lockdowns pounded sentiment, but they have broadly rallied from their March 23 low. The S&P, which fell 34% in just 23 trading days, has been boosted by central bank support, and is now roughly 10% off its record high. Stocks were, ...

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A Crisis Like No Other, An Uncertain Recovery

Global growth is projected at –4.9 percent in 2020, 1.9 percentage points below the April 2020 World Economic Outlook (WEO) forecast. The COVID-19 pandemic has had a more negative impact on activity in the first half of 2020 than anticipated, and the recovery is projected to be more gradual than previously forecast. In 2021 global growth is projected at 5.4 percent. Overall, this would leave 2021 GDP some 6½ percentage points lower than in the pre-COVID-19 projections of January 2020. The adverse impact on low-income households is particularly acute, imperiling ...

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The Great Lockdown through a Global Lens

The Great Lockdown is expected to play out in three phases, first as countries enter the lockdown, then as they exit, and finally as they escape the lockdown when there is a medical solution to the pandemic. Many countries are now in the second phase, as they reopen, with early signs of recovery, but with risks of second waves of infections and re-imposition of lockdowns. Surveying the economic landscape, the sheer scale and severity of the Global Lockdown are striking. Most tragically, this pandemic has already claimed hundreds of thousands ...

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