‘More bankruptcies and higher unemployment rate imminent’

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The Managing Director of the International Monetary Fund (IMF), Kristalina Georgieva, has said most countries especially in Europe will experience bankruptcies and high unemployment following the impact of the coronavirus pandemic on the economy.

She said also the pandemic will lead to high levels of poverty and inequality.

“We also know we will come out on the other side with bigger deficits and higher debt. It is very likely we will see more bankruptcies and higher unemployment—some of it structural—and unfortunately, we see the risk of higher levels of poverty and inequality,” he said in her remarks to Italy’s National Consultation.

She further asked on governments to pay attention to how the stimulus packages provided to support businesses in this period of the coronavirus pandemic, are utilised.

She said : “We also know that we ought to pay attention to how we use the enormous injection of stimulus so that we give the economy a chance to recover and grow.

“And here is an unusual message to the membership from the IMF Managing Director: please spend as much as you need. But spend carefully and keep your receipts: we don’t want accountability to be lost.

“And we must be careful not to withdraw the stimulus too fast if we want to ensure the recovery maintains momentum. We know that digital is a big winner in this crisis—and some experts say the pandemic has accelerated the digital transformation by two or three years. This gives us a chance to build on this transformation for the future.

She further stated that Europe is in a more risk-prone environment.

“As one critical example, climate change is real. We may have put it on the back burner during this crisis, but it is still with us. I tell everyone—if you don’t like the pandemic, you are not going to like the climate crisis when it comes. So, there is action to take towards a greener economy.

“And we know there are ways in which we must address inequality. This was done well after the Second World War, and after this current crisis we must renew our commitment in a similar way.

“Together, the whole world—including the EU, Italy and the IMF—faces a clear question. How will history judge our response to this crisis?

Will history say we presided over the great reversal that brought more poverty, more fragmentation, and less trade? Or will history say we marshalled a great reset, and a great renewal on a massive scale?

“Here, the European Union has championed a strong sense of solidarity and a strong sense that the recovery is coming.

“As a former budget commissioner, I believe this is a key moment when the European dream is becoming reality because Europe is standing together to put forward a fiscal support package of the magnitude required to help countries cope with the pandemic and its economic fallout. This is money that Europe will get from markets on the basis of its strength, and that it will distribute to member states on the basis of their needs.

“And I want to say clearly – it is not just about the money. It is a chance for Europe to restart its convergence engine, which has been stalling since the global financial crisis. It is a chance for Europe to exercise leadership. And it is a chance not to be missed.”

Source: Laudbusiness.com/Ghana

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