IMF announces $50 bn to fight coronavirus outbreak

WASHINGTON: The International Monetary Fund Managing Director Kristalina Georgieva announced a $50 billion aid package to help fight the coronavirus.

Georgieva on Wednesday said on CNBC’s “Squawk Alley” that the money is available “immediately” and is for low-income and emerging market countries. Most of the money will be interest-free, and countries do not need to have a pre-existing program with the IMF to participate, she said. “What we’re doing right now is reviewing country by country their financial needs, and engaging with them to make sure they are aware of this resource and we can immediately respondto them,” Georgieva said. “We’re in an early stage of engagement, but I can assure you that we will act very quickly as requests come.”

There are more than 90,000 confirmed cases of the coronavirus around the world, and the outbreak has spread to six continents. The epidemic has led to severe travel restrictions in key economic hubs in China and Italy. The IMF would like to see the money used first to bolster health-care systems and then for targeted fiscal stimulus programs and to help liquidity, Georgieva said.

The organization is also working with the World Bank to help countries obtain some of the medical equipment, such as medical masks and respiratory equipment to combat the virus.

The World Bank had also announced a $12 billion program on Monday to help poor nations deal with the health and economic consequences of the epidemic. The countries around the world should also consider creating measures to help the economy during an economic slowdown, such as offering lines of credit to smaller businesses and programs to pay workers who have to stay home. “We think it is now the time to put in place precautionary measures should the outbreak become more severe,” Georgieva said.

Earlier Wednesday at an event in Washington, D.C., the MD of the fund said that, “we are faced with a generalized weakening in demand, and that goes through confidence and through spillover channels, including trade and tourism, commodity prices, tightened financial conditions. “They call for an additional policy response to support demand and ensure an adequate supply of credit,” she added.

The announcement comes amid coordinated action from global central banks. The U.S. Federal Reserve announced a 50 basis point cut Tuesday and the Bank of Canada followed up with a move of the same magnitude Wednesday.Meanwhile, the World Bank has approved $300 million, including $200 million for Punjab’s Human Capital Investment Project, and another $100 million for refugees as well as for Multi Donor Trust Fund.

According to the WB’s announcement made here on Wednesday, Pakistan is accelerating investments in healthcare and education to prepare children to reach their productive potential and generate wealth. Today, the World Bank committed $200 million for the Punjab Human Capital Investment Project that will strengthen the health services and social protection for poor and vulnerable households in select districts in Punjab.

"Pakistan’s strongest asset is its people. Investing at the start of life, especially for girls and women, is essential to empower citizens to thrive,” said Illango Patchamuthu, the World Bank Country Director for Pakistan. “This project will help the Punjab province to invest in early years now to create a productive workforce for the future.”

The project will increase the quality and uptake of health services, including maternal care, immunizations, and childbirths attended by qualified professionals, reaching up to 18 million people. It will provide early childhood education and skills training for young parents and will improve systems to more efficiently manage economic and social inclusion programs.

"There are substantial financial and non-financial barriers to access quality health services, such as expenses to visit health facilities and the burden of household chores and childcare, especially among women in poor households," said Yoonyoung Cho, Task Team Leader for the project. “The first 1,000 days are the most critical time in a child’s development, thus prioritizing maternal and natal care is integral to their productive capacity and strengthening human capital accumulation in Pakistan.”

The World Bank also approved $85 million in grants and credits from IDA 18 Regional Sub-Window for Refugees and Host Communities and $15 million from the Multi-Donor Trust Fund to the federal government and the Government of Balochistan to support the strengthening of institutions, delivery of services, and support for livelihoods and enterprise development.

The World Bank’s project document stated that the Punjab is home to about 48 percent of the country’s poor and inequality remains a challenge in the province.

A large proportion of Punjab’s population is clustered around the poverty line and thus remains vulnerable to poverty, especially during shocks, whether environmental (e.g. floods and climate-change-induced disasters) or economic (e.g. the recent debt crisis). Punjab’s inequality is not only in incomes but also in opportunities for human capital investment. There are large variations in poverty rates across districts, and in human capital indicators by household income as well as by geographic location. Overall, health and education outcomes are far poorer among households in south Punjab, where the poverty rate (39 percent) is almost twice as high as the province’s average (21 percent).

The human capital challenges faced in early childhood, which is a critical life stage for human capital accumulation, are disproportionately high among low-income households and lagging regions in Punjab. The infant mortality rate in Punjab is 60 per 1,000 live births (as compared to the national average of 61 per 1,000 live births).

It is higher among poorer households with 83 per 1,000 live births among the bottom quintile households as compared with 27 per 1,000 live births among the top quintile households. Despite progress over time, malnutrition remains prevalent.