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Dear Colleague,
In today's edition we focus on how the IMF is updating its policy advice to meet new challenges, the IMF's proposal for ending the pandemic, making rent affordable in Europe, taxing multinationals in Europe, a new upcoming issue of Finance & Development, and much more. On that note, let's dive right in.
 THE FUTURE OF IMF POLICY ADVICE
The global economy is changing fast. So are the challenges countries face, whether it's the still ongoing pandemic or the existential threat of climate change. The IMF is responding too as it modernizes the way it provides its regular policy advice to member countries--a process known as surveillance.
To confront these changes, the Fundâs policy advice is evolving, both on substance and in the way the Fund engages with its members, the IMF's Fabian Bornhorst and Ceyla Pazarbasioglu write in a new blog.
The new direction of this key pillar of IMF work is highlighted in the 2021 Comprehensive Surveillance Review, recently approved by the Fundâs Executive Board. It outlines four priorities: confronting risks and uncertainties, preempting and mitigating spillovers, fostering economic sustainability, and a unified approach to policy advice.
What it means in practice: Regular economic assessment reports will be more focused, and better integrate macrofinancial aspects, risk assessment and contingency planning, spillovers, and capacity development. New technologies and enhanced data availability will help to modernize business practices and enhance the relevance of surveillance. Policy advice will also become more granular and country-specific.Â
đș Watch a short video below explaining the IMF's new approach to regular policy advice. Read the full blog here or visit the IMF's Comprehensive Surveillance Review website. Â
A PROPOSAL TO END THE PANDEMIC
IMF Managing Director Kristalina Georgieva continued her appeal for a groundbreaking new proposal that could bring the pandemic substantially under control worldwide through a pragmatic plan for funding vaccine access.
"The most important message of our proposal is a coordinated effort up front can bring enormous benefits. Between now and [20]25, the world economy can benefit by $9 trillion if we accelerate the exit from the pandemic, of which 60 percent will go to the developing world, 40 percent to rich countries," she said in an interview with Bloomberg.
The proposal developed by the IMF's Gita Gopinath and Ruchir Agarwal sets the goal of vaccinating at least 40 percent of the population in all countries by the end of 2021 and at least 60 percent by the first half of 2022; tracking and insuring against downside risks; and ensuring widespread testing and tracing, maintaining adequate stocks of therapeutics, and enforcing public health measures in places where vaccine coverage is low.
"When we look at it from from an IMF perspective, our duty is to tell our members how they can be more prosperous," Georgieva said in an interview with the BBC. "Well, one way to be more prosperous is get out of this pandemic as fast as you can. We have seen it. Just to make a point that this is not so out of out of reach."
đș Watch a short video to hear Gopinath and Agarwal explain the proposal.
THE PATH FORWARD
During a discussion this week with the Washington Post's David Ignatius, the Managing Director shared two key lessons from the pandemic: First, in good times, invest in strong fundamentals. Second, we have to expand our definition of resilience--invest in resilient people, a resilient planet, and resilient economies
None of the problems we had before the pandemicâlike low productivity and high inequalityâhave gone away. Coming out of the crisis, we have to invest in enhancing productivity, and be much more determined to work together, Georgieva said.
 MAKING THE RENT MORE AFFORDABLE IN EUROPE
Even before the pandemic, many store or restaurant workers living in a major city in Europe had to spend more than half of their householdâs income on rent. During the pandemic, many of them have seen their incomes fall, pushing up their share of income going to rent. Since low-income and young renters tend to work more frequently in contact-intensive sectors or hold insecure jobs, government policies are needed to make sure that these households do not get left behind as economies recover from the COVID-19 crisis, the IMF's Alfred Kammer, Andrea Schaechter, and Andreas Tudyka write in a new blog.
In our recent study of 17 advanced European economies, a typical renter household spent about 25 percent of its income on rent in 2018, while a young family paid nearly one-third of their earnings on renting. For a household in the lowest 20 percent of the income distribution, the share of income needed for rent was much higher, at 40 percent--the threshold at which a household is considered overburdened by rent payments.
 Policies to make rental housing more affordable:Â
-Effective policies should include efforts that enhance long-term income opportunities for low-income households and the young.Â
-The most powerful immediate policy tool is to raise the levels and coverage of portable housing allowances, which can be used flexibly across locations.Â
-Governments should also launch initiatives that increase the supply of affordable housing.
Read the full blog here.
đș Watch Kammer and Schaechter discuss rental affordability in Europe with members of the European Parliament's Committee on Employment and Social Affairs.
TAXING MULTINATIONALS IN EUROPE
The IMF's Vitor Gaspar and Victoria Perry discussed this week how countries can better coordinate their corporate tax policies. The presentation at a conference of the European Economic and Social Committee came on the heels of the release of a new IMF Departmental Paper on taxing multinational companies in Europe by the IMF's Ernesto Crivelli, Ruud A. de Mooij, J. E. J. De Vrijer, Shafik Hebous, and Alexander D Klemm.
Gaspar said the unique institutional structure in the EUâwith its objective to fully integrate goods, labor, and capital marketsâdemands deeper forms of coordination among its member states to address the challenges of tax competition.
đș Watch the event here.
GENDER, MONEY AND FINANCE
ICYMI, IMF Managing Director Kristalina Georgieva took part in the 1st Vienna Economic Dialogue on Gender, Money, and Finance, on Thursday, May 20. The Managing Director joined Christine Lagarde, President, European Central Bank, for a discussion on Gender and Economic Policy-Making.Â
Georgieva said German Chancellor Angela Merkel is the woman who has had the biggest impact on her. She recounted a past visit by Merkel, who was then Germany's environment minister, to the World Bank with an all-woman delegation. Georgieva, then an environmental economist, noted she was one of the few women representing World Bank staff.Â
"That picture was embedded in my brain. And it actually led me to recognize that I personally have a responsibility to step up, that women have to take charge," she said. "I have one message to women that are listening: support other women."
The discussion was preceded by remarks by Barbara Kolm, Vice-President of the General Council, Oesterreichische Nationalbank (OeNB) and Robert Holzmann, Governor, Oesterreichische Nationalbank (OeNB).
A livestream of the remarks and discussion can be accessed here. The conference is hosted by the Oesterreichische Nationalbank (OeNB) in cooperation with SUERF â The European Money and Finance Forum and the Joint Vienna Institute (JVI). More information about the conference can be found here.
F&D: THE NEW MORALITY OF DEBT
Society has long debated the morality of debt. In ancient times, debt was viewed in many cultures as sinful, with lending at interest especially repugnant. These concerns continue to influence perceptions of lending and the regulation of credit markets today. Nikita Aggarwal is a research associate at the Digital Ethics Lab at Oxford University's Internet Institute. In this podcast, Aggarwal says our increasingly online lives prove a valuable source of data for lenders and add new dimensions to debtâs morality. Her article, The New Morality of Debt, is published in the March 2021 issue of Finance and Development Magazine.Â
 NEW F&D ISSUE: WHAT NEXT FOR EMERGING MARKETS
The COVID-19 pandemic has been a momentous test for emerging markets. This diverse group of countries has been hit by the crisis to varying degrees and face different challenges. Some countries, like China, were able to contain the virus relatively quickly and have managed to grow despite the odds. Others could be struggling to deal with the aftereffects of the pandemic for years to come. The June edition of Finance & Development explores several cross-cutting issues affecting this group of countries, including debt sustainability, market turbulence, prospects for growth, and the pandemicâs effect on inequality.
Click here to read the new issue when it is released Wednesday, June 2 at 12 p.m. ET.
IMF AROUND THE WORLD
The IMF Executive Board this week announced the conclusion of Article IV economic assessment consultations with Luxembourg and Slovenia.Â
IMF staff also concluded an Article IV mission and second review for the 12-month Stand-By Arrangement for Egypt. Staff also concluded virtual missions to Uruguay and the Central African Republic.
RESPONDING TO THE CRISIS: To date, 86 countries have received more than $110 billion in financial assistance in response to the economic impact of the COVID-19 crisis. Find out more in our  lending tracker, which visualizes the latest emergency financial assistance and debt relief to member countries approved by the IMFâs Executive Board.Â
Overall, the IMF is currently making about $250 billion, a quarter of its $1 trillion lending capacity, available to member countries.
Looking for our Q&A about the IMF's response to COVID-19? Click here. We are also continually producing a special series of notesâabout 100 to dateâby IMF experts to help members address the economic effects of COVID-19 on a range of topics including fiscal, legal, statistical, tax and more.
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