IMF cautious on long-term prospects for global economy
Member-countries encouraged to raise additional US$650 billion in new special drawing rights
9 Apr 2021 | The Asset

The International Monetary Fund (IMF) remains cautious about the long-term prospects for the post-Covid-19 global economy, despite a quicker-than-expected recovery from the crisis following the success of what it sees as an unprecedented policy response by national governments and the rapid progress in vaccine development.

“The global economy is recovering from the crisis faster than expected, thanks to an unprecedented policy response and rapid progress in vaccine development,” the IMF says in a communique issued by the International Monetary and Financial Committee (IMFC) on April 8. “But the prospects for recovery are highly uncertain and uneven within and across countries due to varying policy space, different economic structures and rigidities, pre-existing vulnerabilities, and uneven access to vaccines. Elevated financial vulnerabilities could pose risks, should global financial conditions tighten swiftly. The crisis may cause extended scarring and exacerbate poverty and inequalities, while climate change and other shared challenges are becoming more pressing.”

The IMFC called on IMF member-countries to raise an additional US$650 billion in new special drawing rights (SDRs), the international reserve asset of the IMF, to beef up the IMF’s reserves.

“We welcome the IMF’s efforts to help members toward a sustained recovery from the crisis,” according to the communique. “We call on the IMF to make a comprehensive proposal on a new Special Drawing Rights general allocation of US$650 billion to help meet the long-term global need to supplement reserves, while enhancing transparency and accountability in the reporting and the use of SDRs.”

In the same communique, the IMFC called on member-countries to continue supporting the fund’s goals of addressing global income inequality and climate change in the wake of the pandemic. Goals include helping members identify and manage the macro-critical implications of climate change, digitalization, inequality and fragility, in close collaboration with partners, and to further integrate these issues into its surveillance, lending and capacity development in line with its mandate.


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