IMF, World Bank pledge help amid calls for more debt relief

In this April 8, 2020 photo, laborers wear facemasks to protect against the spread of the new coronavirus as they look at job postings at a labor market in Qingdao in eastern China's Shandong Province. China has reported its biggest economic decline since the 1970s as it fought the coronavirus in the first quarter of the year. (Chinatopix via AP)
In this April 8, 2020 photo, laborers wear facemasks to protect against the spread of the new coronavirus as they look at job postings at a labor market in Qingdao in eastern China's Shandong Province. China has reported its biggest economic decline since the 1970s as it fought the coronavirus in the first quarter of the year. (Chinatopix via AP) (Chinatopix)

WASHINGTON – The 189-nation International Monetary Fund and its sister lending agency, the World Bank, on Friday pledged to step up their efforts to cushion the blow to the global economy from the coronavirus pandemic.

The two agencies' assurance came at the end of their spring meeting where they heard calls for them to provide more debt relief to poorer nations being battered by the health crisis.

IMF Managing Director Kristalina Georgieva and World Bank President David Malpass both stressed that their agencies are well aware of the rising threat from a health crisis that is expected to plunge the global economy into the deepest recession since the Great Depression of the 1930s.

“A large global contraction in the first half of 2020 is inevitable,” Georgieva said in remarks Friday to the Development Committee, a top policy panel that guides operations at both the IMF and the World Bank. “Uncertainty surrounding the severity and length of the crisis is exceptionally high.”

The IMF is forecasting that the global economy will shrink by 3% this year, the worst downturn since the 1930s and far more severe than the 2008 financial crisis.

Both the IMF and the World Bank received backing this week from the Group of 20 major industrial countries for a moratorium on debt repayments for the rest of the year by the world’s poorest nations — countries such as Afghanistan, Ethiopia and many nations in sub-Saharan Africa. About 77 nations are in covered by the debt suspension that would run from May 1 through the end of this year.

In a closing communique Friday, the Development Committee, composed of finance officials from around the world — directed both the World Bank and the IMF to review the debt burdens of middle-income countries and to “explore expeditiously a range of solutions to fiscal and debt stress in those countries on a case by case basis.”

Nations classified as middle income include countries such as Indonesia, Peru, Lebanon and Iraq.