Kristalina Georgieva, managing director of the International Monetary Fund (IMF), says there is a major risk that most developing countries will languish for years to come.
In a blog post on Wednesday, Georgieva encouraged advanced economies to take strong policy actions to prevent great divergence between them and low-income countries.
The IMF boss said the institution sees an accelerated difference within countries, with the youth, the low-skilled, women and informal workers losing their jobs, and millions of children facing disruptions to their education.
“As our note to the G20 meeting points out, there is a major risk that as advanced economies and a few emerging markets recover faster, most developing countries will languish for years to come. This would not only worsen the human tragedy of the pandemic, but also the economic suffering of the most vulnerable,” she said.
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According to Georgieva, there is a need for much stronger international collaboration to hasten the COVID-19 vaccine rollout in poorer countries.
“We know that the pandemic is not over anywhere until it is over everywhere. While new infections worldwide have recently declined, we are concerned that multiple rounds of vaccinations may be needed to preserve immunity against new variants,” she said.
She further noted that the economic crisis can be tackled through continued fiscal support by G20 governments to help maintain livelihoods, as well as monetary policy support by major central banks which has enabled several developing economies to regain access to global capital markets.
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However, she warned that continued monetary policy support may invite consequences such as excessive risk-taking and market exuberance.
She also urged G20 countries to step up support to vulnerable countries through additional concessional financing, while leveraging private finance through stronger risk-sharing instruments.
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