IMF and World Bank face flood of demands for aid from developing world
The health of the global economy comes down to a race for money influx from emerging markets amid the coronavirus pandemic and efforts by the International Monetary Fund and the World Bank to re-inject money.
The two Washington-based financial institutions face the greatest challenge since they were established as the heart of the international monetary system during the Bretton Woods Conference of 1944. The fundamental mission of the IMF was to safeguard financial stability World Bank to prevent a repeat of the Great Depression, while that of the World Bank was to rebuild war-torn economies in Europe.
“We are considering a collapse in commodity prices and a collapse in world trade unlike anything we’ve seen since the 1930s, ”said Ken Rogoff, the former IMF chief economist, now at Harvard University. An avalanche of public debt crises will certainly follow, he said, and “the system just can’t handle so many defaults and restructurings at the same time.”
“It’s a bit like going to hospitals and they can take care of a certain number of Covid-19 patients but they cannot take care of them all at the same time,” he added, referring to the disease caused by the novel coronavirus.
More than 90 countries have called for IMF bailouts – nearly half of the world’s nations – while at least 60 have sought World Bank programs. The two institutions together have resources of up to $ 1.2 trillion that they said they are making available to combat the economic fallout from the pandemic, but the question is whether they can act quickly enough to reverse the growing damage. .