Georgieva also argued that it is necessary “undertake reforms aimed at job creation (for example, in Argentina, Brazil and South Africa) ”.
“The good news is that the fundamentals of the (global economic) recovery remain strong due to the combined effect of vaccines and the extraordinarily synchronized policies of the G20 ”, considered the official.
“Nevertheless, our progress is particularly hampered by new virus variants and their economic impact, as well as disruptions in the supply chain “Giorgieva warned.
The IMF recently lowered its forecast for global growth to 5.9% for this year in a context where “The outlook is very uncertain and downside risks dominate”.
Georgieva pointed out that inflation and debt levels have increased in many economies and said that “the divergence in economic fortunes is increasingly persistent, since too many developing countries desperately lack vaccines and resources to support their recovery. “
Reforms
The IMF document raises the need to “Strong, sustainable, balanced and inclusive growth.”
For this, structural reforms that improve growth are considered necessary, the implementation of labor market policies that support job search and reforms that reduce entry barriers to new businesses and create new opportunities.
It is estimated that this package of short- and medium-term policies It could boost the GDP of the G 20 countries by around $ 4.9 trillion through 2026.
Close gaps
The first task, according to Georgieva, is “End the pandemic by closing financial gaps and sharing vaccines”. The report realizes that large-scale vaccination programs and supportive policies have helped save lives and boost economic activity in many nations.
However, it also points out that while new virus variants continue to spread, “Access to vaccines is lagging in many of the poorest economies, slowing recoveries and affecting economic prospects”.
Among the problems, the report add that “Several factors have led to an increase in inflation, high levels of public and private debt have increased vulnerabilities and climate change continues to threaten growth and livelihoods”.
In this context, the IMF document says that “The G-20 must take immediate joint action to save lives and support recovery everywhere.”
In this regard, it raises:
• Close funding gaps and share vaccine doses to end the pandemic.
The study states that more actions are needed to vaccinate 40% of the population in all countries by the end of the year. Vaccine surpluses must be shared urgently, and an additional $ 20 billion of seed-based grant funding is needed for treatment, testing, and vaccine procurement and distribution in developing countries.
• Help developing countries cope with financial problems.
It considers that greater support is necessary through donations and grants. It also proposes improve the implementation of the G-20 Common Debt Framework and the support of this group to channel the Special Drawing Rights issued by the IMF (650,000 million dollars) from the strongest economies to the most vulnerable countries.
· Commit to a comprehensive package to achieve net zero carbon emissions by mid-century. He argues that the G-20 must “urgently” reach an agreement on minimum carbon prices
· Addressing other long-standing global challenges.
The document states that the global minimum corporate tax should be quickly implemented. Also resolve trade and technological tensions and agree on reforms that guarantee a more open and transparent trading system.
Inflation
Another policy recommendation is that monetary policies should not react to temporary inflation. But it is considered that central banks should be “Prepared to act quickly “ if expectations of rising inflation became tangible.
It also considers that fiscal support should be calibrated based on local conditions, guaranteeing adequate support for the care of health and the most vulnerable and, at the same time, being integrated into solid frameworks in the medium term.
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