IMF allocates $ 50 billion to fight coronavirus
Kristalina Georgieva, Managing Director of the International Monetary Fund, announced on Wednesday a $ 50 billion aid package to fight coronavirus.
Georgieva said in an interview with CNBC that the money will be available «immediately» and targeted at low-income and emerging market economies.
Most of the money will be interest-free and countries do not need to have an active IMF program to participate, she said..
«What we are doing now is analyzing the financial needs of each country and interacting with these countries to make sure they know about this resource, ”Georgieva said. – We are at an early stage of interaction, but I can assure you that we will act very quickly as requests are received».
There are over 90,000 confirmed cases of coronavirus worldwide and the outbreak has spread to six continents. The epidemic has led to severe travel restrictions in key economic centers in China and Italy.
According to Georgieva, the IMF would like the money to be used first to support health systems and then for targeted fiscal stimulus and liquidity programs. The organization is also partnering with the World Bank to help countries obtain some medical equipment, such as medical masks and respiratory equipment, which are used to fight the virus..
On Monday, the World Bank announced a $ 12 billion program to help poor countries cope with the health and economic impact of the epidemic.
Countries around the world should also consider establishing measures to help the economy during economic downturns, such as providing lines of credit for small businesses and pay programs for workers who have to stay at home..
«We believe it is time to take precautions if the outbreak gets worse», – said Georgieva.
Earlier Wednesday at an event in Washington DC, she said: «We are facing a general weakening in demand and this is happening through loss of confidence and secondary channels including trade and tourism, commodity prices, tightening financial conditions».
«This requires an additional policy response to support demand and ensure adequate credit supply.», – she added.
The announcement came against the backdrop of coordinated action by global central banks. The US Federal Reserve announced a 50 basis point cut on Tuesday, and the Bank of Canada did the same..
European stocks fell on Thursday despite initial positive reaction to the $ 50 billion pledge by the International Monetary Fund (IMF) to tackle the coronavirus outbreak.
The pan-European Stoxx 600 retraced unexpectedly during morning trading, dropping 2.8% below flat line as core resources took the lead as all sectors and major stocks plunged.
Stocks in Asia traded higher on Thursday, helped by the US markets with the Dow Jones industrial data soaring more than 1,100 points on Wednesday. Former Vice President Joe Biden‘s big first wins during Super Tuesday sparked hype in the healthcare sector.
Global markets are also bolstered by the IMF’s announcement of a $ 50 billion bailout package.
«What we are grappling with is the uncertainty that drives our projections, which at this point allow us to argue that global growth in 2020 will fall below last year’s levels.», – told CNBC Georgieva.
IMF action comes amid a series of rate cuts from central banks this week, including the US Federal Reserve and the Reserve Bank of Australia..
According to the latest figures from the World Health Organization (WHO), the number of global coronavirus cases is at least 93,000. According to WHO, the number of deaths in the world is about 3,199 people.
Attention in Europe is still focused on Italy, the country affected by the outbreak outside of Asia, along with Iran.
The latest data received from Italy on Wednesday night put the number of confirmed cases at 2,706 and 109 deaths; most of the cases (1,479) are focused on Lombardy, where the financial center of Italy is located in Milan. On Wednesday, the Italian government decided to close all schools and universities across the country until mid-March..
Oil prices rose more than 1% on Thursday ahead of the OPEC meeting in Vienna, Austria. The de facto OPEC leader Saudi Arabia is expected to push the oil group of 14 member countries and its non-OPEC allies, including Russia, to expand or deepen production cuts to support the market amid slowing demand growth.
Hellofresh jumped 10% to the top of the Stoxx 600 before falling after JPMorgan rallied in a German kitchenware company. Income remained the key driver of individual price changes in the European market.
Hugo Boss surged 4% after reporting that its 2019 annual profit fell, but at the same time the company raised its dividend and gave an upbeat forecast for 2020. However, by the middle of the morning, the stock went into negative territory..
UK Melrose Industries and German pharmaceutical company Merck Kgaa posted more than 4% gains in early trading following full-year earnings reports.
Capita fell 15.3% while Evraz fell 9.7%, Continental fell 6.9% and ITV fell 5.5%.
Jeff Bezos will have to pay $ 2 billion in income tax to the budget of Washington
COVID-19 and Latin America’s Economy | IMF Western Hemisphere Director Alejandro Werner