IMF calls for flexible policies to foster inclusive recovery

A woman walks past the International Monetary Fund (IMF) headquarters in Washington, D.C., the United States, March 30, 2021. (Photo by Ting Shen/Xinhua)

WASHINGTON, April 8 (Xinhua) -- The International Monetary Fund (IMF) on Wednesday urged policymakers to provide flexible support tailored to varied needs across sectors and economies to foster a fair and inclusive recovery of the global economy.

"The good news is that there is light at the end of the tunnel. After the worst global recession since the second world war, the recovery is underway," said IMF Managing Director Kristalina Georgieva at a virtual press conference during the IMF/World Bank Spring Meetings.

And yet despite a ray of light the crisis continues to cast a dark shadow, Georgieva said.

"Economic fortunes are diverging dangerously. A small number of economies, led by the U.S. and China, are powering ahead -- while poorer countries are falling behind in this multi-speed recovery," Georgieva said.

"We also face extremely high uncertainty, especially over the impact of new virus strains and potential shifts in financial conditions," she continued, adding that there is the risk of further economic scarring.

In order to give everyone a fair shot in recovery, Georgieva said policymakers should support vulnerable households and viable firms amid the crisis, adopt targeted fiscal measures and maintain favorable financial conditions.

Echoing Georgieva, IMF's Fiscal Affairs Department Director Vitor Gaspar said policymakers should offer more targeted support.

"The pandemic has had a disproportionately negative effect on poor people, youth, women, minorities, and workers in low-paying jobs and the informal sector," said Gaspar in a blog co-authored with colleagues on Wednesday.

Gasper said "policymakers should ensure that social protection is available and spending is sustainable over the duration of the crisis by expanding the coverage of social safety nets in a cost-effective way."

He said government could gradually roll back blanket loans and guarantees, and limit public support to circumstances in which there is a clear need for intervention, he said.

Both IMF officials called for all countries to have a fair shot at coronavirus vaccines, with availability and pace of inoculation varying widely, hindering an inclusive global economic recovery.

More balanced vaccination campaigns across the world is the "highest return global public investment project," considering an estimated cost per person is about 30 dollars, said Gasper earlier this week in an interview with Xinhua.

Noting that a vaccine policy is an economic policy, Georgieva said that ending the health crisis faster could add almost 9 trillion dollars to global GDP by 2025, yet the window of opportunity is closing.

"Governments must show the same sense of urgency and collaboration to provide vaccines to everyone, everywhere," she said.

Once the health crisis is over, she said, governments should gradually scale back support programs -- while scaling up targeted hiring subsidies and retraining and reskilling, which is particularly important for young people and women, who have disproportionately suffered in the crisis.

Looking ahead, the focus should be on scaling up public investment -- in green projects and digital infrastructure, in health and education -- to ensure that everyone can benefit from the historic transformation to greener, smarter, and more inclusive economies, Georgieva said.

Countries will need sufficient public revenues and more efficient spending, said the IMF chief. In many cases, this will mean more progressive taxation, and international agreements on questions like minimum taxation for companies, she added.