The International Monetary Fund (IMF) is making available about $50 billion through its rapid-disbursing emergency financing facilities to help address the new Coronavirus impact in low income and emerging market countries.
Of this, $10 billion is available at zero interest for the poorest members through the Rapid Credit Facility, said IMF Managing Director Kristalina Georgieva at a joint press conference with World Bank Group President David Malpas.
"We all recognise that the situation with the spread of the coronavirus is very serious and could well get worse. This affects us all," said Georgieva.
She said global supply will be disrupted due to morbidity and mortality, but also the containment efforts that restrict mobility and higher costs of doing business due to restricted supply chains and a tightening of credit.
Demand will also fall due to higher uncertainty, increased precautionary behaviour, containment efforts, and rising financial costs that reduce the ability to spend.
"Experience suggests that about one-third of the economic losses from the disease will be direct costs: from loss of life, workplace closures, and quarantines. The remaining two-thirds will be indirect, reflecting a retrenchment in consumer confidence and business behavior and a tightening in financial markets," she said.
However, she said financial systems are more resilient than before the Global Financial Crisis.
The global growth in 2020 will drop below last year’s level. "How far it will fall, and for how long, is difficult to predict, and would depend on the epidemic, but also on the timeliness and effectiveness of our actions," she said.
A generalised weakening in demand through confidence and spillover channels—including trade and tourism, commodity prices, and tighter financial conditions—would call for an additional policy response to support demand and ensure an adequate supply of credit, she said.
