WASHINGTON: The International Monetary Fund is warning of growing threats to the global economic recovery, posed by the ongoing coronavirus pandemic and the outbreak of inflation.
The lending agency called on Thursday for greater efforts from rich countries to boost coronavirus vaccination rates in poorer countries, as well as urged the Federal Reserve and other central banks if current inflationary pressures do not prove to be temporary. If so, they respond quickly.
The IMF panel that sets policy for the 190-nation organization ended its annual meeting with a joint statement expressing concerns about the wide gap in vaccination rates between rich and poor countries.
The group urged greater efforts by wealthy countries to achieve the target of immunization of 40% of all countries by the end of this year and 70% by the middle of next year.
While about 60% of the population in advanced economies is now fully vaccinated, only 4% of the population in poor countries is.
We will take steps to help boost the supply of vaccines and essential medical products and inputs to developing countries, and to help address relevant supply and financing barriers, finance officials pledged.
The group said the emergence of forms of the virus has raised uncertainty and the risk of recovery is sloping downward. The crisis is increasing poverty and inequality.
The United States was represented at finance meetings by Treasury Secretary Janet Yellen and Federal Reserve Chairman Jerome Powell.
Finance officials also noted rising global inflationary pressures and said the Fed and other central banks need to act appropriately if the price spike proves to be a greater threat to the economic recovery.
The Fed indicated last month that it may soon begin the process of eroding some extraordinary support in response to last year’s coronavirus-triggered slowdown. The move will be the first step towards a possible interest rate hike that will slow growth and keep inflation under check.
The IMF this week released an updated economic forecast that lowered its forecast for global growth to 5.9% from 6% in July. The downgrade reflects persistent supply chain disruption and a wide disparity in vaccination rates. For the United States, the IMF forecast 6% growth this year, down from its July forecast of 7%.
The IMF policy panel also endorsed the agency’s executive board’s findings on Monday of full confidence in IMF Managing Director Kristalina Georgieva. Support for Georgieva came after an investigation into the allegations, while a top World Bank official, she and other World Bank officials pressured staff to boost China and other countries’ rankings in an influential business-climate survey, which has since been closed. .
Georgieva told reporters on Wednesday that the review showed there was no merit in the allegations. But Yellen said in a speech to an IMF policy panel on Thursday that the results of a review by an outside law firm could undermine trust in international financial institutions if strengthened to promote accountability, protect data integrity and prevent misconduct. Action is not taken.
Critics have cited the incident to support their argument that China and other countries are trying to exert undue influence on the IMF, the World Bank and other international financial institutions.
Yellen said the IMF and other organizations need to find ways to increase the rights of whistleblowers.
Yellen said the United States would closely monitor developments and evaluate any new facts and findings.
Anti-poverty groups expressed disappointment Thursday that the IMF was not more specific on how the agency plans to boost vaccination rates and provide increased resources to fight climate change.
Given how the pandemic continues to worsen in much of the world, I am concerned by the lack of action in meetings on vaccine distribution, debt relief and general pandemic response, said Eric Lecompte, executive director of the religious development group Jubilee USA Network, a said in the statement.
LeCompte said it is shocking that we still do not have a plan for funding and distributing vaccines to reach all developing countries.
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