The International Monetary Fund (IMF) announced on Monday that the organization stands ready to help nations deal with the financial and health effects of the COVID-19 outbreak. While this was not formally a global action, the statement acknowledges that instances such as this can have an adverse economic impact, and the IMF noted its mandate to assist countries through policy advice and lending. Where the statement brought some hope of action was that the IMF said that it is working closely with development partners from the World Bank, World Health Organization and Asian Development Bank.
Initially, the move offers timely policy advice, as well as technical assistance and financial support. The group also noted that it has facilities and instruments in its toolkit that can help countries respond to the economic impact of the novel coronavirus. Among those toolkit items are emergency financing, augmenting existing lending programs, grants for debt relief, new financing if needed and supporting capacity development.
On the last two items, the IMF statement said:
New financing arrangement. The IMF can also provide support through a new financing arrangement under its existing facilities such as Stand-By Arrangements, although some of the tools listed above would generally be preferable, including because they can be disbursed quickly to address the urgent financial need.
The IMF will continue to support vulnerable countries through capacity development. Given the need to quickly redirect public resources, the IMF will remain closely engaged with the affected member countries and development partners, working as needed to reprioritize capacity development activities.
In emergency financing, the IMF named its Rapid Credit Facility and Rapid Financing Instrument, which are loans that can be disbursed very quickly, to provide emergency financial assistance to member countries without needing to have a full-fledged program in place. The IMF also noted that it can modify existing programs to support countries with new and urgent needs arising from the spread of coronavirus (similar to how it provided additional financing for Guinea, Liberia and Sierra Leone to fight the Ebola outbreak back in 2014).
Monday’s announcement is not a formal declaration of market assistance to nations who are in need. It is effectively a reminder that they are watching the situation as it develops and can rapidly help member nations if needed. More announcements are likely to be seen in the wake of the growing COVID-19 outbreak.
The IMF may not hold the same ability as a true central bank to offer financial assistance, but the group still has a rather large arsenal of available capital that can be accessed if needed. According to its own factsheet, the IMF holds around 90.5 million ounces (2,814.1 metric tons) of gold as its most recent holdings.
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