Focus: GS-III Indian Economy, Economic Development, Disaster Management
Why in news?
The global coronavirus pandemic is causing an economic crisis unlike any in the past century and will require a massive response to ensure recovery, IMF said on 9th April 2020.
Around half a billion people could be pushed into poverty as a result of the economic fallout from the pandemic unless richer countries take “urgent action” to help developing nations, a leading aid organisation warned on 9th April.
What to expect?
- Global growth will turn sharply negative in 2020, with 170 of the International Monetary Fund’s 180 members experiencing a decline in per capita income.
- Anticipate the worst economic fallout since the Great Depression.
- Even in the best case the IMF expects only a “partial recovery” next year, assuming the virus fades later this year, allowing normal business to resume as the lockdowns imposed to contain its spread are lifted.
- But “it could get worse,” and “there is tremendous uncertainty around the outlook” and the duration of the pandemic.’
- The bleak outlook applies to advanced and developing economies alike. This crisis knows no boundaries.
What IMF recommends?
Countries already have taken steps worth a combined $8 trillion, but IMF Chief urged governments to do more to provide “lifelines” for businesses and households to “avoid a scarring of the economy that would make the recovery so much more difficult.”
Oxfam on half a billion people facing Poverty:
- Oxfam has urged richer countries to step up their efforts to help the developing world.
- Failing to do so, it added, could set back the fight against poverty by a decade and by as much as 30 years in some areas, including Africa and West Asia.
- The devastating economic fallout of the pandemic is being felt across the globe.
- But for poor people in poor countries who are already struggling to survive there are almost no safety nets to stop them falling into poverty.
- The report warns that between 6% and 8% of the global population could be forced into poverty.
International Monetary Fund (IMF)
- The International Monetary Fund (IMF) is an international organization headquartered in Washington, D.C.
- It consists of 189 countries working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world.
- It periodically depends on the World Bank for its resources.
- Through the fund and other activities such as the gathering of statistics and analysis, surveillance of its members’ economies, and the demand for particular policies, the IMF works to improve the economies of its member countries.
Objectives of IMF are to promote:
- International monetary co-operation
- International trade
- High employment
- Exchange-rate stability
- Sustainable economic growth
- Making resources available to member countries in financial difficulty
Functions of the IMF
- To provide financial assistance to member countries with balance of payments problems, the IMF lends money to replenish international reserves, stabilize currencies and strengthen conditions for economic growth. Countries must embark on structural adjustment policies monitored by the IMF.
- It oversees the international monetary system and monitors the economic and financial policies of its 189 member countries. As part of this process, which takes place both at the global level and in individual countries, the IMF highlights possible risks to stability and advises on needed policy adjustments.
- It provides technical assistance and training to central banks, finance ministries, tax authorities, and other economic institutions. This helps countries raise public revenues, modernize banking systems, develop strong legal frameworks, improve governance, and enhance the reporting of macroeconomic and financial data. It also helps countries to make progress towards the Sustainable Development Goals (SDGs).