IMF says COVID-19 could lead to serious economic consequences in future

IMF says COVID-19 could lead to serious economic consequences in future

- The IMF has expressed fears over the impact of the coronavirus on countries all over the world

- Its report shows that some measures have been outlined by emerging market economies to deal with COVID-19

- The IMF added that inadequate policy space may compel some countries to resort to unorthodox measures

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The International Monetary Fund (IMF) is of the view that the outbreak of the coronavirus could hurt lives and have dire economic effects on countries all over the world.

It added that despite measures implemented to deal with the pandemic, emerging market economies show signs of considerable uncertainty.

In its June World Economic Outlook update, the IMF revealed that a number of emerging market economies such as South Africa eased monetary policy.

IMF says COVID-19 could lead to serious economic consequences in future
Kristalina Georgieva, Managing Director of the IMF. Source:
Source: UGC

The IMF added that these economies have relaxed their financial stance as they hope to tackle the health crisis, support people and firms, and offset the economic shocks.

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A report by shows that such modest efforts have yielded significantly greater results than what was experienced during the global financial crisis.

According to the IMF, “confronting a more severe downturn will be challenging because most emerging markets entered the current crisis with limited room for traditional fiscal, monetary, and external policy support. And much policy room has already been used up by actions undertaken in recent months.”

The IMF went on to say that a lack of policy space may compel some countries to adopt more unorthodox measures.

These include price controls, trade restrictions as well as unconventional monetary policy and steps to ease credit and financial regulation.

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Earlier, reported that Nigeria had secured the $3.4 billion emergency loan it requested from the IMF.

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The emergency fund was approved by the IMF board on April 28. It is meant to assist Nigeria’s fight against COVID-19.

IMF managing director, Kristalina Georgieva, disclosed on Tuesday, May that the $3.4 billion had been credited to the CBN’s account.

She explained that the conditions of the loan are quite favourable, noting that the repayment period is five years, with up to two and a half years grace period.

Georgieva said the interest on the loan is one percent. The IMF director noted that said there was the need for all receivers of the emergency fund in Nigeria to keep receipts of expenditure.

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