The International Monetary Fund (IMF) announced last week that it has made $50 billion available to help support low income and emerging market countries following the global outbreak of the novel coronavirus (Covid-19).
Kristalina Georgieva, IMF managing director, said the funds were made available to aid countries where they do not have the financial capacity to withstand the impact of the outbreak.
“We know that the disease is spreading quickly. With over one-third of our membership affected directly, this is no longer a regional issue – it is a global problem calling for a global response,” she said.
Global supply chains have been effected the most by the outbreak as most countries implement containment measures to help stop the spread of the virus. As part of these measures, most countries have limited the amount of goods entering and leaving the nation, while suspensions have also been placed on products coming from certain parts of the world, particularly Asia.
This has caused great deal of uncertainty for traders with supply and demand dwindling because of the outbreak.
“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,” said Georgieva.
“Demand will also fall due to higher uncertainty, increased precautionary behaviour, containment efforts, and rising financial costs that reduce the ability to spend.”
Additionally, she warned that despite not knowing to what extend the coronavirus has already impacted the global financial landscape, 2020 will for sure be a subdued year for economic growth.
The IMF made the funds available through its rapid-disbursing emergency financing facilities, with $10 billion of it available to its poorest members at a zero percent interest rate. – Bjorn Vorster
