Coronavirus: IMF encouraged by China's coronavirus recovery, but says pandemic may flare up again

WASHINGTON (REUTERS) – The International Monetary Fund on Monday (April 6) cited limited but encouraging signs of recovery in China, the first country to suffer the brunt of the Covid-19 pandemic, but said it could not rule out a resurgence of the pandemic in China and elsewhere.

In a blog, top IMF economists said the pandemic caused by the new coronavirus had pushed the world into a recession that would be worse than the global financial crisis, and called for a global, coordinated health and economic policy response.

“The economic damage is mounting across all countries, tracking the sharp rise in new infections and containment measures put in place by governments,” the IMF experts wrote.

The total confirmed cases of Covid-19 around the world jumped to more than 1.25 million, with 68,400 deaths reported, according to a Reuters tally.

China was seeing a modest improvement in its purchasing manager surveys (PMIs) after sharp declines early in the year, and daily satellite data on nitrogen dioxide concentrations in the atmosphere – a proxy for industrial and transport activity – showed a gradual decline in containment measures, the IMF experts wrote.

“The recovery in China, albeit limited, is encouraging, suggesting that containment measures can succeed in controlling the epidemic and pave the way for a resumption of economic activity,” the authors wrote.

“But there is huge uncertainty about the future path of the pandemic and a resurgence of its spread in China and other countries cannot be ruled out,” they added.

European countries such as Italy, Spain, and France are now in acute phases of the outbreak, followed by the United States, while the epidemic appeared to be just beginning in many emerging market and developing economies.

Disruptions caused by the virus are starting to ripple through emerging markets, while the latest indices from purchasing manager surveys (PMIs) point to sharp slowdowns in manufacturing output in many countries.

The US economy is experiencing the consequences with “unprecedented speed and severity”, the blog said, noting that nearly 10 million Americans had applied for unemployment benefits in the last two weeks in March, a sharper increase than even during the peak of the global financial crisis.

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IMF approves $1.3 billion loan for Jordan, adjusts for coronavirus expenses

AMMAN (Reuters) – The International Monetary Fund said on Wednesday its board had approved a four-year, $1.3 billion loan program for Jordan, signaling confidence in the country’s reform agenda at a time it was taking measures to cushion its economy from the fallout of the coronavirus outbreak.

The extended fund facility program was anchored by Jordan’s commitments to make structural reforms designed to lower electricity costs for businesses and create incentives for them to hire more young people, the IMF said.

“The aim is to support stronger and more inclusive growth, create jobs, especially for women and young people, and reduce poverty,” the IMF said in a statement.

The program was designed before the coronavirus outbreak, but the IMF said changes were made to support unbudgeted spending covering emergency outlays and medical supplies and equipment.

“If the impact of the outbreak is deep enough to put at risk program objectives, the program will be adapted further to the changed circumstances, upon reaching understandings with the authorities,” the IMF said.

The IMF said the approval would immediately make available about $139.2 million for disbursement, with the remaining amounts phased over the life of the program, subject to eight reviews.

Jordanian Finance Minister Mohammad Al Ississ told Reuters earlier that the loan had been approved. He said in a statement that loan and associated reforms would help Jordan attract more donor and investment funds.

“It signals confidence in Jordan’s economic reform process, and support for our efforts to mitigate the impact of the virus on vulnerable economic sectors and individuals,” Al Ississ said.

Officials are worried the coronavirus crisis, which has hit the thriving tourist sector, will slash growth projections and deepen an economic downturn and a slowdown in domestic consumption. The tourist sector generates around $5 billion annually.

The monetary and fiscal authorities have taken a series of measures from injecting over $700 million in liquidity to reducing interest rates and delaying bank loan installments and customs and tax payments to help soften the negative impact.

The IMF’s approval of Jordan’s programme was testimony to the macroeconomic stability of a country where regional conflict in recent years has weighed on investor sentiment, Al Ississ said.

Al Ississ said late last year that a new IMF deal would help the country secure concessional grants and loans at preferential borrowing rates to ease annual debt servicing needed to reduce the debt to GDP ratio.

Public debt has shot up by almost a third in a decade to 30.1 billion dinars ($42.4 billion) in 2019, equivalent to 97% of GDP.

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