THE International Monetary Fund (IMF) says it is ready and willing to help member countries, including Jamaica, which might suffer any fallout from the novel coronavirus (COVID-19), which is beginning to cripple several economies.

Managing director of the IMF Kristalina Georgieva used a joint press conference with World Bank Group President David Malpass yesterday to announce that the fund is making available about US$50 billion through its rapid-disbursing emergency financing facilities for low-income and emerging market countries that could potentially seek support to deal with the threat of the novel coronavirus.

Of this amount US$10 billion is available at zero interest for the poorest members through the IMF’s Rapid Credit Facility.

According to Georgieva, the IMF knows that the disease is spreading quickly with more than one-third of its membership affected directly.

“This is no longer a regional issue; it is a global problem calling for a global response,” declared Georgieva.

“We also know that it will eventually retreat, but we don’t know how fast this will happen. We know that this shock is somewhat unusual as it affects significant elements of both supply and demand. 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.

“Demand will also fall due to higher uncertainty, increased precautionary behaviour, containment efforts, and rising financial costs that reduce the ability to spend. These effects will spill over across borders,” added Georgieva.

She said experience suggests that about one-third of the economic losses from the disease will be direct costs from loss of life, workplace closures, and quarantines while the remaining two-thirds will be indirect, reflecting a retrenchment in consumer confidence and business behaviour and a tightening in financial markets.

“The good news is that financial systems are more resilient than before the global financial crisis. However, our biggest challenge right now is handling uncertainty,” said Georgieva.

“Under any scenario, global growth in 2020 will drop below last year’s level. How far it will fall, and for how long is difficult to predict and would depend on the epidemic, but also on the timeliness and effectiveness of our actions.

“This is particularly challenging for countries with weaker health systems and response capacity — calling for a global coordination mechanism to accelerate the recovery of demand and supply,” added Georgieva.

The IMF head said that the number one priority, in terms of fiscal response, is ensuring front-line health-related spending to protect people’s well-being, take care of the sick, and slow the spread of the virus.

“I can’t emphasise enough the urgency of stepping up health-related measures and the need to ensure the production of medical supplies so that supply is at par with demand. Second, macro-financial policy actions may be required to tackle the supply and demand shocks that I mentioned above.

“The aim should [be to implement] ‘no regret’ actions that shorten and soften the economic impact. They should be timely and targeted to the sectors, businesses and households hardest hit,” underscored the IMF boss.

Georgieva further argued that a generalised weakening in demand through confidence and spill over channels — including trade and tourism, commodity prices, and tighter financial conditions — would call for an additional policy response to support demand and ensure an adequate supply of credit.

She noted that adequate liquidity will also be needed to offset financial stability risks.

“In short: the situation is evolving rapidly, and we should stand ready to provide a more forceful, coordinated response if conditions require it. Along these lines, I welcome the statement from the G7 yesterday (Tuesday) that they are ready to cooperate further on timely and effective measures.”

Georgieva noted that there are many member states at risk, including those with weak health systems, inadequate policy space, commodity exporters exposed to terms-of-trade shocks, and others that are particularly vulnerable to spill overs.

“I am particularly concerned about our low-income and more vulnerable members. These countries may see financing needs rise rapidly as the economic and human cost of the virus escalates. Our staff is currently working on identifying vulnerable countries and estimating potential financing needs should the situation deteriorate further. The fund has resources available to support the membership,” declared Georgieva.