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Dear Colleague,
Welcome to the April 5 briefing of the 2021 Spring Meetings.
Today we spotlight governor talks about emerging from the pandemic in Spain and digitalization in Burkina Faso, a capacity development talk that focuses on the IMF's engagement on social protection, and our first analytical corner which features a range of issues tied to pandemic recovery including financial stability in Asia and labor markets in Latin America. On that note, let's get started.
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TODAY'S AGENDA (MONDAY, APRIL 5)
Speaker: Nadia Calviño, Vice-President and Minister of Economy and Digitalization, Spain // Moderator: Alfred Kammer, Director of the European Department, IMF.
Speaker: Lassané Kabore, Minister of Economy, Finance and Development of Burkina Faso // Moderator: Abebe Aemro Selassie, Director of the African Department, IMF.
Speakers: Antoinette Sayeh, Deputy Managing Director, IMF; Fernanda Brollo, Senior Economist, IMF; Brooks Evans, Economist, IMF; Tanja Goodwin, Senior Country Economist, WBG; Sania Nishtar, Special Assistant on Poverty Alleviation and Social Safety to the Prime Minister of Pakistan; Moderator: Roger Nord, Deputy Director Institute for Capacity Development, IMF.
Speakers: Estelle Liu, European Department, IMF; Karim Foda, European Department, IMF; lulia Teodoru, Middle East and Central Asia Department, IMF; Diego Gomes, Strategy, Policy, and Review Department, IMF; Marina M. Tavares, Research Department, IMF; Carlo Pizzinelli, Western Hemisphere Department, IMF; Jorge Alvarez, Western Hemisphere Department, IMF.
Opening Remarks: Kristalina Georgieva, Managing Director, IMF // Speaker: Aurélia Nguyen, Managing Director of the Office of the COVAX Facility // Moderator: Sabina Bhatia, Deputy Secretary, Secretary's Department, IMF.
TOMORROW'S AGENDA (TUESDAY, APRIL 6)
Speaker: Fahad Almubarak, Governor of the Saudi Central Bank // Moderator: Jihad Azour, Director of the Middle East and Central Asia Department, IMF.
Speaker: Boris Vujčić, Governor, Croatian National Bank // Moderator: Alfred Kammer, Director of the European Department, IMF.
Speaker: Roberto de Oliveira Campos Neto, Governor of the Central Bank of Brazil // Moderator: Alejandro Werner, Director of the Western Hemisphere Department, IMF
Speakers: Gita Gopinath, Chief Economist and Director, Research Department, IMF; Petya Koeva Brooks, Deputy Director, Research Department, IMF; Malhar Nabar, Division Chief, Research Department, IMF; Moderator: Raphael Anspach, Senior Communications Officer, IMF.
Speakers: Laura Gores, Economist, IMF; Juan Pablo Guerrero, Network Director, Global Initiative for Fiscal Transparency; Roxana Melani Rodriguez, Vice Minister of Finance and Budget, Honduras; Gerardo Una, Senior Economist, IMF // Moderator: Martin Caudron, Communications Officer, IMF.
Speakers: Tobias Adrian, Financial Counsellor and Director, Monetary and Capital Markets Department, IMF; Fabio Natalucci, Deputy Director, Monetary and Capital Markets Department, IMF; Evan Papageorgiou, Deputy Division Chief, Monetary and Capital Markets // Moderator: Randa Elnagar, Senior Communications Officer, IMF.
Speakers: Kristalina Georgieva, Managing Director, IMF; Mohamed El-Erian, President of Queens’ College, Cambridge University; Vera Songwe, United Nations Under Secretary-General and Executive Secretary of the Economic Commission for Africa // Moderator: Martin Wolf, Chief Economics Commentator at the Financial Times.
Speaker: Sethaput Suthiwartnarueput, Governor of the Bank of Thailand // Moderator: Kenneth Kang, Deputy Director of the Asia and Pacific Department, IMF.
SMALL AND MEDIUM ENTERPRISE INSOLVENCIES
In a new blog by Federico J. Díez, Romain Duval, Chiara Maggi and Nicola Pierri, they explain that the pandemic has hit small and medium enterprises particularly hard, partly because they are predominant in some contact-intensive sectors like hotels, restaurants, and entertainment. As a result, many advanced economies risk experiencing a wave of liquidations that could destroy millions of jobs, damage the financial system, and weaken an already fragile economic recovery. Policymakers should take novel and swift action to alleviate this wave.
Abundant liquidity support through loans, credit guarantees, and moratoria on debt payments have protected many small and medium enterprises from the immediate risk of bankruptcy. But liquidity support cannot address solvency problems. As firms accumulate losses and borrow to keep carrying on, they risk becoming insolvent—saddled with debt well over their ability to repay.
New IMF staff research quantifies this solvency risk, and the findings are concerning. The pandemic is projected to boost the share of insolvent small and medium enterprises from 10 percent to 16 percent in 2021 across 20 mostly advanced economies in Europe and the Asia-Pacific region. The increase would be on a magnitude similar to the rise in liquidations in the 5 years after the 2008 global financial crisis, but it would take place over a much shorter period of time. Projected insolvencies put about 20 million jobs at risk (i.e., over 10 percent of workers employed by small and medium enterprises), roughly the same as the total number of currently unemployed workers, in the countries covered by the analysis.
To secure a strong recovery, governments in advanced economies need to address the risks of small and medium enterprise distress. Combining continued liquidity support, quasi-equity injections and enhanced restructuring mechanisms could go a long way toward that goal. Read the full blog here for more.
WORLD BANK AND IMF SUPPORT FOR DEBT RELIEF
A new paper discusses World Bank and IMF support for addressing fiscal and debt distress in IDA countries, with emphasis on strong continued concessional flows for green, resilient, and inclusive development. The paper focuses on the World Bank-IMF recommendations to the G20 on a potential further extension of the debt service suspension initiative (DSSI) until the end of 2021, the IMF’s and World Bank’s role in implementing and maximizing the benefits of the G20’s Common Framework for Debt Treatments beyond the DSSI, and other complementary actions.
RECAP OF LAST WEEK
Ahead of the Spring Meetings, Kristalina Georgieva framed the convening by discussing the future of the global economy at an event hosted by the Council on Foreign Relations and moderated by CNN's Fareed Zakaria, in which she focused on giving everyone a fair shot—a shot in the arm, everywhere, to bring the pandemic to a durable end; and a shot at a better future for vulnerable people and vulnerable countries to pave the way to inclusive and sustainable recovery. Read the full speech or watch the 60-min discussion.
In a new blog by Sonali Das and Philippe Wingender, based on the analytical chapter 2 of our latest World Economic Outlook, they write that despite higher-than-anticipated growth as the global economy recovers from the COVID-19 shock, we expect world output in the medium-term to be about 3 percent lower in 2024 than pre-pandemic projections. Because financial stability has largely been preserved, this expected scarring is less than what we saw following the global financial crisis. 📺 Watch a discussion on this topic between Sonali Das, Philippe Wingender and CNBC's Silvia Amaro.
In a new blog based on analytical chapter 3 of our latest World Economic Outlook, John Bluedorn explores how policies can lessen the pandemic’s harsh and unequal effects. We find that a package of measures to help workers keep their jobs while the pandemic shock is ongoing, combined with measures to encourage job creation and ease the adjustment to new jobs and occupations as the pandemic ebbs, can markedly dampen the negative impact and improve the labor market’s recovery. 📺 Watch a discussion on this topic between John Bluedorn and the Washington Post's Heather Long.
In a new blog based on the analytical chapter 2 of our latest Global Financial Stability Report, Adolfo Barajas and Fabio Natalucci find that an easing of financial conditions tends to accelerate buildups in leverage. This further complicates the challenging intertemporal policy trade-off that arises because loose financial conditions, while providing a short-term boost to growth, also accentuate downside risks to growth in the medium term. Macroprudential policy can temper leverage buildups and strengthen resilience, thus mitigating future financial stability risks.
In a new blog by Andrea Deghi and Fabio Natalucci, based on the analytical chapter 3 of our latest Global Financial Stability Report, they write that recent IMF analysis finds that pandemic has clouded the outlook for commercial real estate, given the advent of trends such as the decline in demand for traditional brick-and-mortar retail in favor of e-commerce, or for offices as work-from-home policies gain traction. These trends could disrupt the market for commercial real estate and potentially threaten financial stability. 📺 You can also watch a 20-min discussion on this topic between Fabio Natalucci, Andrea Deghi and CNBC’s Silvia Amaro.
In a new blog by David Amaglobeli, Vitor Gaspar, and Paolo Mauro, based on a new analytical chapter of the Fiscal Monitor, they write that inequality was a pre-existing condition that worsened COVID-19’s impact. Disparities in access to basic services have contributed to uneven health outcomes. According to new research, countries with worse access to health care, proxied by the number of hospital beds, have had higher COVID-19 mortality rates than predicted by the number of cases and age structure. Similarly, their analysis shows that countries with higher relative poverty had higher rates of both cases and deaths. Read the blog, chapter summary, or full chapter text. 📺 You can also watch a 10-minute conversation on these topics between Paolo Mauro and the Economist's Henry Curr.
What cross-regional perspectives can be gathered from previous economic, political, and social transformations, such as the fall of the Berlin Wall, the aftermath of the Arab Uprisings, and recent protests in Latin America? What can policymakers learn from these events on how to move forward with reforms to support a new social contract? The IMF’s Kristalina Georgieva, Jihad Azour, Alejandro Werner, and a distinguished panel of experts from the Middle East, Latin America, and Europe Erik Berglöf, Mauricio Cárdenas, Marwan Muasher and Minouche Shafik, discussed how the pandemic can serve as an opportunity for countries to overhaul their economies, making them smarter, fairer, greener and more conducive to job creation. 📺 Watch this fascinating 60-min discussion here.
Click here to review the full rundown of last week.
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Sincerely,
IMF 2021 Spring Meetings Team
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