IMF says $10 trillion spent to combat pandemic, far more needed

FILE PHOTO: IMF Managing Director Kristalina Georgieva speaks during a conference hosted by the Vatican on economic solidarity, at the Vatican, February 5, 2020. REUTERS/Remo Casilli/File Photo

WASHINGTON (Reuters) - Governments around the world have spent $10 trillion (£7.9 trillion) in fiscal actions to respond to the novel coronavirus pandemic and its economic fallout, but significant further efforts are needed, the head of the International Monetary Fund said on Thursday.

New estimates suggested that up to 100 million people could fall into extreme poverty as a result of the crisis, IMF Managing Director Kristalina Georgieva said, noting this would erase the past three years of gains made in poverty reduction.

The disease has infected nearly 7.4 million people around the world and 415,545 have died. The World Bank this week forecast the coronavirus would shrink global output by 5.2% in 2020, the deepest contraction since World War Two.

The IMF is due to update its forecasts on June 24. Georgieva has said that further cuts are “very likely” to the Fund’s April forecast for a 3% contraction in global output.

To promote a more inclusive recovery, “substantial fiscal stimulus” should focus on minimizing job losses and preventing a rise in inequality, she wrote in a blog on the IMF’s website.

Investments should focus on improving access to health care and education, strengthening climate protections and broadening the access of low-income households and small business to financial products and technology, she wrote.

“The COVID-19 crisis is inflicting the most pain on those who are already most vulnerable. This calamity could lead to a significant rise in income inequality,” she said.

Policymakers should act quickly and deliberately to promote a more inclusive recovery, she said, noting that new research by the IMF and World Bank showed that more equitable access was associated with stronger and more sustainable growth.

Moving cash payments by governments into bank accounts using fintech and mobile phones could reduce the number of “unbanked” adults by 100 million globally from around 1.1 billion. And financially inclusive countries had a 2- to 3-percentage point edge in gross domestic product growth, she said.

Reporting by Andrea Shalal; Editing by Chizu Nomiyama and David Gregorio