The International Monetary Fund warned the Group of 20 primary economies on Monday that the coronavirus crisis is not over and called on the United States, Britain and other countries to rack up the amount of budget spending planned lately.
Premature withdrawal from the budget at a time when unemployment rates are still high “would further damage livelihoods and increase the likelihood of widespread bankruptcies, which in turn could jeopardize recovery,” senior IMF officials warned in a blog published Monday.
The blog, titled “The Crisis Is Not Over, Stay Spent (Wisely),” said that immediate and unprecedented action across the G20 and emerging market economies had prevented an even deeper crisis, with G20 countries offering $11 trillion in support.
Read also: IMF blames coronavirus resurgence for decreased UK expansion
Last month, the IMF predicted a global contraction of 4. 4% in 2020 and a return to expansion of 5. 2% in 2021, but warned that the scenario remained dire and that governments would not prematurely withdraw stimulus measures.
On Monday, he said infections in Covid-19 continued to spread, but that much of the budget provided was now disappearing, with money transfers to households, deferred tax bills and transitional loans to companies that had expired or are about to do so from here. of the year.
In economies where deficits have fallen to 10% of gross domestic product this year, fiscal balances are expected to narrow by more than 5% of GDP in 2021, largely due to a sharp withdrawal in relief measures, they said.
“More than expected lately is desirable next year in some economies,” the IMF said in a larger report to G20 countries also released Monday. He highlighted Brazil, Mexico, the United Kingdom and the United States, noting significant declines in employment in those countries. expected fiscal economies and contractions.
Democratic lawmakers and Republican President Donald Trump have failed to reach agreement on a new stimulus package for the United States, the world’s largest economy. New spending may not be agreed until early 2021, depending on the final results of Tuesday’s presidential election. .
Read also: IMF likes Indian ‘masala’ for capital flows
The IMF said countries deserve to keep poor and vulnerable teams disproportionately affected by the crisis, as well as viable businesses to maintain industrial relations. He cited India, Mexico, Russia, Saudi Arabia, Turkey and the United States as examples.
However, he cautioned against supporting corporations that prevented the movement of resources from sectors that could permanently retreat to expanding sectors.
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