IMF chief Kristalina Georgieva on Thursday lauded Japan’s plans to spend about 20% of its gross domestic product to respond to the economic challenges of the coronavirus pandemic and help the world’s poorest countries, urging others to do their part.
Japan, the world’s third largest economy behind the United States and China, was the largest contributor to IMF financial resources and the largest contributor to the fund’s concessional lending facilities, Georgieva said in a statement.
“While it has the clear intention to support the Japanese economy, Japan will also underpin the stability of the global economy through contributions to the International Monetary Fund’s resources for the provision of debt relief and concessional financing to low-income countries,” she said.
The IMF this month forecast the global economy will contract by 3% due to the pandemic, in what would be the worst economic downturn since the Great Depression of the 1930s.
IMF and World Bank officials have repeatedly warned that the world’s poorest countries will be particularly hard hit by the pandemic because they lack the resources and infrastructure to respond to the resulting health and economic challenges.
“It is therefore crucial that the membership work together to support our poorest and most vulnerable members in this difficult period,” Georgieva said in the statement.
She said Japan had provided close to 9 billion in Special Drawing Rights, the IMF’s currency, to date to the Poverty Reduction and Growth Trust, which amounted to 23% of all PRGT loans, and over SDR 900 million in subsidy grant resources.
“I urge other member countries to contribute to both the (Catastrophe Containment and Relief Trust) and PRGT. By working together, we can overcome the global challenge facing us and help restore growth and prosperity,” she said.
Funded by grants from members, the CCRT has already provided grants to 29 countries to cover their debt service payments to the IMF for an initial six-month period, according to the IMF. Members can also provide grants and loans to the PRGT, which supports low-income countries.
Washington has been noticeably absent from the relief drive.
US Treasury Secretary Steven Mnuchin this month told the IMF’s steering committee that Washington was exploring contributions to both facilities, but gave no details on the amount or timing of such a contribution.
Japan this month said it aimed to double its contribution to the PRGT from the current SDR 3.6 billion, saying it would make the first SDR 1.8 billion available immediately, with the rest to follow as other member countries upped their contributions.