World Finance Chiefs Warn of Divergent Recoveries From Covid

(Bloomberg) -- Central bankers and finance ministers advising the International Monetary Fund urged strong global cooperation to expedite vaccine access and limit what they termed a divergence in recoveries from the Covid-19 pandemic, warning that they saw risks tilted to the downside.

They will take steps to boost vaccine supplies and medical products in developing countries, removing financing constraints, according to a statement issued Thursday by the International Monetary and Financial Committee, the main steering panel of the IMF’s 190 member countries. 

“We will continue to prioritize health spending and protecting the most vulnerable, while shifting focus, as appropriate, from crisis response to promoting growth and preserving long-term fiscal sustainability, including, where applicable, by bolstering medium-term fiscal frameworks,” they said.  

Their pledge comes after the Washington-based lender trimmed its outlook for the 2021 economic rebound earlier this week, as it warned threats to growth had increased, pointing to the delta variant, strained supply chains, accelerating inflation and rising costs for food and fuel.  

The IMFC also pledged to speed up reforms to build a more resilient and sustainable economy, committing to “accelerate climate action in line with the Paris Agreement.” 

“We will utilize policy mixes based on all effective tools, ranging from fiscal, market, and regulatory actions, including efficient policy instruments to reduce greenhouse gas emissions, while protecting the most vulnerable,” it said. 

IMFC members welcomed the fund’s record issuance of $650 billion of reserve assets known as special drawing rights, and asked that more members sign “voluntary SDR trading arrangements to enhance market capacity.” 

The fund asked for new loan and subsidy contributions to the fund’s Poverty Reduction and Growth Trust and support the establishment of a new Resilience and Sustainability Trust to provide affordable financing and reduce risks to balance-of-payments stability, including those related to climate change and pandemics. 

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