Those hit by coronavirus should not go bankrupt: IMF

WASHINGTON: The International Monetary Fund (IMF) urged governments on Friday to protect their people from the economic impact of the global health crisis caused by the coronavirus (COVID-19) epidemic.

“Those who are hit the hardest should not go bankrupt and lose their livelihood through no fault of their own,” said IMF guidelines released in Washington. “A family-operated restaurant in a tourism-reliant country, or the employees of a factory shut down because of a local quarantine will need support to weather the crisis.”

The IMF also reminded governments that it has $50 billion available in rapid-disbursing emergency financing to help countries suffering from the virus. “What we want is to guarantee that people are not going to die because of a lack of money,” the statement added, quoting IMF Managing Director Kristalina Georgieva.

While announcing the fund on Wednesday, the IMF chief had also said that the facility could “provide about $40bn for emerging markets that could potentially approach us for financial support.”

The guidelines underlined the need for governments to: Spend money to prevent, detect, control, treat, and contain the virus, and to provide basic services to people that have to be quarantined and to the businesses affected.

The IMF also emphasised the importance of allocating money for local governments to spend in these areas or mobilise clinics and medical personnel to affected places, as China and Korea had done.

It also suggested providing “timely, targeted, and temporary cash flow relief to the people and firms that are most affected, until the emergency abates.”

Another suggestion underlined the need to give wage subsidies to people and firms to help curb contagion, as France, Japan, and Korea were providing subsidies to firms and individuals for leave taken to stay home to care for children during school closings. France is also offering sick leave to people directly affected by the virus who have to self-quarantine.

The IMF noted that China was accelerating payments of unemployment insurance benefits and expanding social safety nets while Korea was increasing job seeker’s allowances for young adults and expanding them for low-income households. It urged other governments also to “expand and extend transfers – both cash and in-kind, especially for vulnerable groups.

The guidelines also suggested providing tax relief for people and businesses who could not afford to pay and creating a business continuity plan.

“Whether you are a ministry of finance or a tax or customs administration, you need to provide services to citizens, taxpayers, and importers in case of widespread contagion, relying as much as possible on electronic means,” the IMF said. “Some of these measures can occur through administrative means and others would require an emergency budget, which would also take stock of the overall fiscal cost.”

The IMF also emphasised the need for communicating to the public how emergency action and changes to original budgets are compatible with stability and sustainability. “IMF capacity development can help countries to strengthen their administrative emergency response capacities in public financial management and revenue administration,” it added.

The fund noted that several facilities were available from the IMF and the global community to support governments requiring financial assistance.

The IMF planners said that such measures could prevent or limit the spread of the disease and protect the people and firms most affected.

“Countries’ so-called automatic stabilisers – the fall in taxes and rise in unemployment and other benefits for those whose incomes and profits decline – would also kick in,” they added.