IMF Frets over Impact of Ebola on Economic Recovery

Advises affected W’African countries to borrow to tackle epidemic

Kunle Aderinokun in Washington DC, USA
      
The International Monetary Fund (IMF) has warned that the Ebola epidemic currently plaguing  some countries of  the world, especially Liberia, Sierra Leone and Guinea, might jeopardise the economic recovery being recorded in the low income and developing economies.
Rather than offer grants to the Ebola-ravaged countries, IMF advised them to borrow with a view to providing a life-buoy to their devastated health systems and economies, saying “it is absolutely fine if those countries increase their fiscal deficit.”

IMF Managing Director, Ms. Christine Lagarde gave this warning during the opening press briefing at the 2014 IMF-World Bank Annual Meetings in Washington DC.

Lagarde specifically pointed out that the economies of Liberia, Sierra Leone and Guinea had witnessed very impressive growth rate but feared that the Ebola epidemic was threatening and may wipe off the gains already recorded.

According to her, “So, very country specific, and by the same token the low income and developing countries are thriving. From a much smaller base, granted, but their growth rates are very impressive, which is why it makes the current epidemic, Ebola, even more threatening, because it might certainly jeopardise economic recovery that was underway and entail a decline of those economies that would be wasting the gains that they have earned as a result of their efforts.”

Lagarde advocated for a new momentum to attack what she called ‘the risk of a new mediocre.’  The proposal, she pointed out, would be discussed with members of the fund in the coming days.

“I believe that you have received the Global Policy Agenda, a copy of which I have somewhere here. This is the document that encapsulates for the membership. the strategic direction of the work we will be discharging over the next 12 months, and this is the document on which we seek their approval and their support.

“Now, this new momentum with hopefully more growth, more jobs, better growth, better jobs, is what we would certainly call upon the membership to produce. What does it mean in practice?” she added.

Besides, the IMF boss advised the countries to increase their fiscal deficit to clear the issue of the Ebola epidemic and put their economies back on track

“I said this morning in the presence of a lot of the members of the community looking after and trying to help the three West African countries that are hit by Ebola, I said for once, just for once, it is absolutely fine if those countries increase in their fiscal deficit. This is not like the IMF.
David was a bit concerned, actually. I'm sure that we have some colleagues who would be a bit concerned. But, it is just an indication that we are capable of mobilising resources. They're not grants, unfortunately, and others are going to have to put grants on the table in significant numbers, but there are circumstances where we are capable of revisiting traditional standards,” she advised.

On the issue of sovereign debt restructuring, Lagarde noted:  “We have done the same this year concerning sovereign debt restructuring. As you know this is a matter that we have studied, where we have come up with proposals, revisions of certain clauses of sovereign bond issuance terms.

“And we will continue to work on those issues. In the same vein, we are also helping the FSB, following up, working, monitoring, and helping with profound changes and modified regulations applicable to the financial sector.”

Culled from: http://www.thisdaylive.com