IMF chief warns of ‘lost generation’ if low-income countries don’t get more help, Auto News, ET Auto

WASHINGTON: The head of the IMF on Friday called on advanced economies to provide more resources to low-income countries, warning of the emerging “big gap” in global growth, which could risk stability and cause social unrest in the coming years.

International Monetary Fund Managing Director Kristalina Georgieva told reporters that 50% of developing countries are at risk of falling further behind, raising concerns about stability and social unrest.

To avoid bigger problems, she said rich countries and international institutions need to add more. She also called on heavily indebted countries to seek debt restructuring sooner rather than later and to strengthen the conditions for growth. “Last year the main focus was on the ‘Big Block.’ This year we face the risk of a ‘big discrepancy,'” Georgieva told reporters during a video conference. “We believe that developing countries, which have been converging in income levels for decades, , this time they will be in a very difficult place. “

Disruptions to living standards in developing countries would make it much more difficult to achieve stability and security for the rest of the world, she said.

“What’s the risk? Social unrest. You can call it a lost decade. It could be a lost generation,” she said.

Georgieva said advanced economies spent on average about 24% of GDP on support measures during the pandemic, compared to 6% in emerging markets and 2% in low-income countries.

Former peak The World Bank Georgieva said vaccination efforts have been uneven, with poor countries facing “enormous difficulties” even as official development funds dwindle.

Only one country in Africa – Morocco – has started vaccinating its citizens, she said, citing serious concerns about increased mortality in many African countries.

“We need to do everything we can to reverse this dangerous divergence,” she said, noting that developing countries may also miss out on the great change that is taking place in rich countries towards more digital and green economies.

She said accelerating vaccinations could add $ 9 trillion to the global economy by 2025, with 60% of the benefits going to developing countries.

Georgieva said she was still working with IMF shareholders to gain support for a new distribution of the IMF’s own currency or special drawing rights (SDRs), which could provide resources for poorer countries.

Former US President Donald Trump had blocked a similar move, similar to the central bank printing money. According to sources familiar with their views, the support of the United States, the dominant shareholder of the IMF, is more likely with President Joe Biden, whose administration is open to a new distribution. The Biden administration did not address the issue publicly.

Georgieva said the $ 250 billion SDR allocation in 2009 helped stabilize the global economy during the global financial crisis, and the current situation is worse.

She said the IMF was completing a periodic review of long-term liquidity needs that could justify a new allocation of SDRs, but did not provide further details.

A group of seven financial officials will discuss a possible new distribution of SDRs when they meet on February 12th, sources said.