IMF Chief Sends Warning of Turbulence with Nations Withdrawing Stimulus

    According to Bloomberg News, the world will be facing greater turmoil and uncertainty in the current year, with the momentum for economic recovery getting slower in pace and inflation-associated risks and bottlenecks related to supply chains gaining pace, aside from impending social unrest. The chief said this of the International Monetary Fund. 

    The IMF is gearing up for a potential hike in demand for its lending activities in the current year as there is tightening of monetary policies by the central banks and as many developing nations are increasing their debt, as stated by Kristalina Georgieva, Managing Director while speaking at a virtual event Wednesday. She also said that two years of dissatisfaction related to upheavals in the economy due to the coronavirus pandemic would likely lead to unrest in some nations. 

    Bloomberg News says that according to Georgieva, the central banks are maintaining a fragile act of balancing, trying to negotiate between rising inflation and its effort to uplift the economy. She said that the tightening of monetary policy would have a ripple effect on emerging markets can trigger a divergence spree between advanced and developing nations. 


    She also said that it is time for all to be prepared for greater turbulence while speaking in an online event. The Center for Global Development, which is a think-tank based in Washington was the host of the event. 

    Last year, according to Bloomberg News, the International Monetary Fund assigned $650 billion, a record figure in reserves, and called it “special drawing rights” extended to the 190 member nations so that these countries tackle the fallout resulting from the pandemic. 

    The fund of $168 billion was also extended to assist the 87 countries to deal with the covid-19 pandemic

    The International Monetary Fund is supposed to meet on Friday to discuss the Resilience and Sustainability Trust proposal. As stated by Georgieva, long-term funding can be provided at low-interest rates to assist nations in withstanding climate crises and pandemics. 

    The trust would receive funds from rich countries by reallocating some reserves that these nations received last year using the special drawing rights. 

    Georgieva also stated that she hopes to set the design for the trust at the spring meeting of IMF. Her suggestion includes increasing the number of nations that the Common Framework covers, and the Group of 20 biggest economies setups ups to extend debt relief for the developing countries. This arrangement would be effective and cater to the present limitations whereby only three nations have sent requests for comfort, she said.

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