The coronavirus crisis is taking the greatest toll on emerging and developing countries, Kristalina Georgieva, managing director of the International Monetary Fund, said during a World Health Organization briefing on Friday.
“This is a crisis like no other,” Georgieva said. “Never in the history of the IMF [have we] witnessed the world economy coming to a stand still.”
“We are now in recession — it is way worse than the global financial crisis.”
Current economic conditions are affecting emerging and developing countries the most, Georgieva said. They have “less resources to protect themselves against this dual crisis — health and economic crisis.”
Amid the spread of coronavirus investors worldwide have flocked to assets like U.S. Treasury bills (XTUP:BX:TMUBMUSD10Y) (XTUP:BX:TMUBMUSD02Y) and gold which are typically perceived as a safer investment in times of heightened economic uncertainty.
The flight to safety has caused “nearly $90 billion” to leave emerging and developing economies, Georgieva said. “This is way more than during the global financial crisis,” she added.
Africa is of particular concern to the IMF.
“There has been a momentum built in Africa,” she said, “we are risking to lose this momentum and even worse to reverse it.”
“We have a $1 trillion war chest,” she said, the IMF is determined to use it to protect those economies from “the scarring of this crisis.”
Some analysts want the IMF to issue a special allocation of SDRs as the international organization did during the financial crisis.
Georgieva also announced that the IMF is “mobilizing emergency financing assistance.” So far, more than 90 countries have requested these funds from the IMF, she said.
Some of these countries “are highly dependent on commodity exports,” but prices are “collapsing.”
Georgieva compared these counties to the elderly and people with underlying health conditions who are most at risk when it comes to contracting coronavirus. “The economic crisis hits vulnerable economies the hardest.”