IMF MD cautions against premature withdrawal of policy support

New Delhi, Oct 6 As economies limp back to normalcy amid the coronavirus pandemic, International Monetary Fund (IMF) Managing Director Kristalina Georgieva has advised countries to avoid premature withdrawal of policy support for businesses and employees.

Speaking at the 125th anniversary of the London School of Economics, the IMF MD noted that healthcare should be the first priority and spending on treatment, testing, and contact tracing is an imperative.

So too is stronger international cooperation to coordinate vaccine manufacturing and distribution, especially in the poorest countries, she said, adding that only by defeating the virus everywhere can we secure a full economic recovery anywhere.

Speaking of the policy support to businesses, she said that it is important to provide continued monetary support and liquidity measures to ensure the flow of credit, especially to small-and medium-sized businesses.

"Avoid premature withdrawal of policy support. Where the pandemic persists, it is critical to maintain lifelines across the economy, to firms and workers such as tax deferrals, credit guarantees, cash transfers, and wage subsidies," Georgieva said.

"Equally important is continued monetary accommodation and liquidity measures to ensure the flow of credit, especially to small-and medium-sized firms, thus supporting jobs and financial stability. Cut the lifelines too soon, and the long ascent becomes a precipitous fall," she said.

She also emphasised on a flexible and forward-leaning fiscal policy and dealing with the debt of companies.

The IMF leader stressed on more grants, concessional credit and debt relief, combined with better debt management and transparency. In some cases, global coordination to restructure sovereign debt will be necessary, with full participation of public and private creditors, she added.

"In all these areas, our member-countries can count on the IMF. We will help them all the way up the mountain."

She noted that emerging markets and low-income and fragile States continue to face a precarious situation. They have weaker health systems.

Georgieva was of the view that although the global economy is coming back from the depths of the crisis, the calamity is far from over.

( With inputs from IANS )