So far, US$8 trillion has been used by countries to fight the COVID-19 pandemic with G20 countries taking the lead.
According to the International Monetary Fund Fiscal Monitor, Italy, followed by Germany, the United Kingdom and France, have spent more than any other country in the world.
Emergency lifelines provided globally include higher spending and foregone revenues (US$3.3 trillion), public sector loans and equity injections (US$1.8 trillion), and guarantees (US$2.7 trillion).
The Group of 20 advanced and emerging economies are at the forefront with actions totalling US$7 trillion. Fiscal support is also provided by automatic stabilizers—features of the tax and benefit system that stabilize incomes and consumption, such as progressive taxation and unemployment benefits.
It said COVID-19 and its economic impact will increase fiscal deficits and public debt ratios across countries given higher spending and plunging revenues.
The Fiscal Monitor shows how policymakers can offer emergency lifelines to: save lives; protect people from losing jobs and incomes, and companies from bankruptcies; and enable a recovery.
Meanwhile, the Managing Director of the IMF, Kristalina Georgieva in a G20 Finance Ministers and Central Bank Governors Meeting today said “And we will need to step up even more. As you know, we project a deep recession in 2020 and only a partial recovery in 2021. To help countries steer through the depth of the recession and support their recovery, we are prepared to use our full toolbox and $ 1 trillion firepower, mindful of the need to use programs wisely and strengthen good governance.”
“Second, to assist our low-income countries, we plan to triple our concessional lending. We are therefore urgently seeking US$18 billion in new loan resources for the Poverty Reduction and Growth Trust, and will also likely need at least US$1.8 billion in subsidy resources. We will also explore whether the use of SDRs could be helpful in this context”, she said.
“Third, we will concentrate both lending and policy support to reduce the scarring of the economy caused by bankruptcies and unemployment, in order to support a speedy recovery. And, with many economies continuing to face capital outflows and high debt, we are ready to work closely with other international institutions and fora, as well as private stakeholders, to help our members steer through this crisis and come out of it more resilient,” she added.