IMF has provided some $100 billion in assistance to over 80 countries during the pandemic so far.
Obaid Humaid Al Tayer, Minister of State for Financial Affairs, participated in the International Monetary and Financial Committee (IMFC) meeting, which took place virtually.
During his speech, which he gave on behalf of the countries of the IMF’s Arab Group, Obaid Humaid Al Tayer praised the continued efforts by the Fund to respond to member’s exceptional needs in the face of an unprecedented shock.
Al Tayer noted that Arab countries have taken a broad range of policy actions, specific to each country’s conditions and outcomes.
He also indicated that the size of the fiscal stimulus was modest in the Arab region in view of the stronger health systems in some countries, and the constrained fiscal scope in others. Al Tayer noted that macro-financial measures, including liquidity support were more widely used, and that Arab countries will continue with exceptional measures so long as required and will adjust them or roll them back as appropriate.
Al Tayer said: “Despite all the precautionary measures that have been taken, Arab countries still face a heightened degree of uncertainty. The Fund should be prepared for a potentially prolonged downturn, a possible second wave of infections, and second round of financial tightening, which could severely limit countries’ access to finance.”
During the meeting he emphasised a few points such as highlighting the fact that exceptional times demand exceptional responses, including access to IMF facilities or further modification of existing facilities. Al Tayer also added that the Fund should do its utmost to support those countries that requested financial support but have not yet received it - noting that this calls for more flexibility, which may entail higher risks, but with appropriate safeguards. He noted that such safeguards must not be too onerous on countries that they prevent access to Fund resources.
Al Tayer said: “It is imperative for us all to work together to help vulnerable countries to attain access to vaccines and treatment and to meet their financing needs.
The IMF should continue to support Arab countries’ efforts to tackle rising debt vulnerabilities caused by this pandemic.”
Al Tayer added: “The pandemic has highlighted the importance of buffers and resilience, including taking advantage of new technologies and digital solutions as a way toward more inclusive growth.”
IMFC meetings are held within the IMF and WBG annual spring meetings.
Advice and reports are provided to the IMF Board of Governors on the supervision and management of the international monetary and financial system, including on responses to unfolding events that may disrupt the system.
The World Bank should push ahead with its efforts to deliver $160 billion in coronavirus aid by June 2021 and explore additional emergency financing and debt relief for developing countries, the bank’s steering committee said on Friday.
In a communique, the joint World Bank and International Monetary Fund Development Committee said the “bold and decisive” response should be accompanied by a review of the World Bank Group’s financial capacity beyond the current fiscal year to ensure that it remains “adequately capitalised to fulfil its mandate.”
The statement said that the IMF has provided some $100 billion in assistance to over 80 countries during the pandemic so far. It also urged the IMF “to deploy all available tools and resources to help members achieve a durable exit from the crisis while building more resilient and inclusive economies.”
US Treasury Secretary Steven Mnuchin urged the International Monetary Fund and World Bank to work judiciously within their existing resources to fight the coronavirus pandemic and urged G20 countries to endorse a proposed debt restructuring framework.
In a statement to the two institutions’ steering committees, Mnuchin said they needed to continue to provide financing, advice and capacity development to aid countries hurt by the COVID-19 pandemic. But as they disburse billions of dollars in emergency funds, they need to plan for transitions to normal financing arrangements, he added.
“It is critical that the World Bank manage financial resources judiciously and transparently, with clear justifications for allocations to countries with robust access to other financing sources, so as not to burden shareholders with premature calls for new financing,” Mnuchin said.
Mnuchin’s statement, which comes as the IMF and World Bank hold annual meetings this week, made no mention of calls from other countries for the Fund to issue a new allocation of Special Drawing Rights. The Treasury opposed that move, which is akin to a central bank creating hundreds of billions of dollars in new currency reserves for IMF countries.