(Bloomberg) — The guardians of the global economy will gather this week under the cloud of the worst recession since the Great Depression, and a recovery dependent on scientists finding a coronavirus vaccine.

The International Monetary Fund and World Bank will hold their annual meetings, with both calling on the Group of 20 largest economies to extend a freeze in debt payments from the world’s poorest nations that’s set to expire at year end.

While the fund last month flagged a “small upward revision” to its 2020 growth forecast from its June outlook, it warned the rebound will be long and uneven.



chart, line chart: Goodbye V, Hello L


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Goodbye V, Hello L

The IMF has been encouraging governments to spend whatever they need to confront the crisis, even while warning that debt as a percentage of GDP will rise to about 100% for the first time.

Fund officials earlier this month proposed reforms to debt restructuring for countries that struggle to meet obligations, a burden likely to rise as the pandemic batters economies. Debt vulnerabilities will be a key theme of the meetings, according to first deputy managing director Geoffrey Okamoto.

The G-20 agreed in April to waive billions of dollars in repayments by poorer nations until the end of the year under the Debt Service Suspension Initiative. The World Bank says this isn’t enough and wants borrowings reduced to prevent a bigger fallout.



chart: IMF Power Players


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IMF Power Players

The IMF has also been working to figure out how to transfer existing reserve assets known as special drawing rights from rich countries that don’t need them to poorer nations that do. A proposal to create $500 billion in SDRs was blocked in April by the U.S., the fund’s biggest shareholder, which criticized the plan as inefficient.

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FILE PHOTO: Mexico’s President Andres Manuel Lopez Obrador delivers his second state of the union address at National Palace in Mexico City, Mexico, September 1, 2020. REUTERS/Henry Romero/File Photo

MONTERREY, Mexico (Reuters) – Mexican President Andres Manuel Lopez Obrador said on Wednesday he respects the International Monetary Fund’s recommendations to Mexico but that it should “stop covering up for corrupt governments.”

On Tuesday, the IMF said Mexico should implement larger near-term fiscal support to alleviate the economic distress largely brought about by measures to contain the coronavirus pandemic.

The IMF recommended the government expand its welfare net and unemployment benefits, and lower interest rates. It also proposed tax reform to support spending in the medium-term.

Lopez Obrador on Wednesday said he respected the IMF but that international financial entities were no longer dictating economic policy in Mexico.

“All we ask … is that they stop rescuing large corporations and that they rescue the people, that they stop covering up for corrupt governments,” he told his regular morning news conference, without providing details on any such potential cases.

The IMF declined to comment.

Reporting by Ana Isabel Martinez and Raul Cortes, writing by Laura Gottesdiener; Editing by Frank Jack Daniel and Steve Orlofsky

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BUENOS AIRES (Reuters) – Argentina tempted wary investors with a dollar-linked bond on Tuesday, issuing around $1.8 billion of the instrument it hopes will help bolster the peso amid a domestic currency crisis, stringent capital controls and tumbling foreign reserves.

FILE PHOTO: Argentine one hundred peso bills are displayed in this picture illustration taken September 3, 2019. REUTERS/Agustin Marcarian/Illustration

The bond is part of a series of measures by the government and the central bank to revive confidence in the peso and encourage local savings. Argentina restructured over $100 billion in foreign-currency debt in recent months.

The restructurings, including $65 billion in foreign-law debt, helped pull the grains-producing nation out of default, but its access to global markets is very restricted. A mission from the International Monetary Fund arrived in the country on Tuesday to start talks for a new deal.

“The government has to show a change of direction quickly,” said Federico Furiase, director of consultancy Eco Go, adding Argentina had “very little gasoline in terms of reserves.”

“The government is trying to buy some time but these are all patches that are unfortunately arriving late.”

Argentina has temporarily cut export taxes on industrial, mining and agricultural products to boost sales and international reserves.

The IMF team started meetings in Buenos Aires as the government seeks a new program to replace a failed $57 billion facility struck in 2018. An IMF official described the visit as being in “listening mode.”

“We have been very clear in this crisis that it is important to provide support to firms and more importantly, to workers,” IMF Managing Director Kristalina Georgieva told CNN Spanish in comments later shared by the government.

“So we are not coming with the idea of, ‘oh, well, let’s see how we can further

WASHINGTON (Reuters) – The global economy is in “less dire” shape than it was in June but risks crashing again if governments end fiscal and monetary support too soon, fail to control the coronavirus and ignore emerging market debt problems, International Monetary Fund Managing Director Kristalina Georgieva said on Tuesday.

FILE PHOTO: International Monetary Fund (IMF) Managing Director Kristalina Georgieva makes remarks during a closing news conference for the International Monetary Finance Committee (IMFC), during the IMF and World Bank’s 2019 Annual Meetings of finance ministers and bank governors, in Washington, U.S., October 19, 2019. REUTERS/Mike Theiler/File Photo

Georgieva told an online London School of Economics event that the IMF will make a small upward revision to its global economic output forecasts next week, adding: “My key message is this: The global economy is coming back from the depths of this crisis.”

“But this calamity is far from over. All countries are now facing what I would call ‘the long ascent’ – a difficult climb that will be long, uneven, and uncertain. And prone to setbacks,” she added in a speech billed as her “curtainraiser” for next week’s IMF and World Bank annual meetings.

The Fund in June forecast that coronavirus-related shutdowns would shrink global gross domestic product by 4.9%, marking the sharpest contraction since the Great Depression of the 1930s, and called for more policy support from governments and central banks.

The IMF will publish its revised forecasts next week as member countries participate in the meetings, which will be held largely in an online format.

Georgieva said the IMF was continuing to project a “partial and uneven” recovery in 2021. In June, it forecast 2021 global growth of 5.4%.

But $12 trillion in fiscal support, coupled with unprecedented monetary easing, has allowed many advanced economies, including the United

LONDON (Reuters) – Five hundred of the world’s leading charities and social groups have sent a letter to the International Monetary Fund warning that its support programmes, which have had to be ramped up to cope with COVID-19, were condemning many countries to years of austerity.

The concern raised before the IMF and World Bank annual meetings next week said current programmes would see 80 countries required to implement austerity worth on average 3.8% of their annual economic output between 2021 and 2023.

An analysis by one of the 500 signatories of the letter, the European Network on Debt and Development, estimated that future fiscal consolidation would represent almost five times the resources allocated to this year’s COVID-19 packages.

More than half the projected consolidation measures — equivalent to 2% of gross domestic product — will take place next year, they added. Some 56 countries would be left with higher public debts by 2023; 30 would end up paying an additional amount equivalent to their 2020 Covid-19 packages to creditors as debt service costs rose every year.

“For 46 countries for which data is available, a decade of austerity measures will reduce public expenditures from 25.7% to 23% of GDP between 2020 and 2030,” the analysis said. The letter https://d3n8a8pro7vhmx.cloudfront.net/eurodad/pages/1062/attachments/original/1601901189/statement-against-IMF-austerity-ENG.pdf?1601901189 called on the IMF to “immediately stop promoting austerity around the world”.

The IMF has responded to an unprecedented number of calls for emergency financing as a result of this year’s pandemic and lockdown measures driving the global economy into a severe recession.

More than 100 countries have requested its help so far. The IMF has doubled the access to its emergency facilities — the Rapid Credit Facility and Rapid Financing Instrument — expecting demand for support to reach about $100 billion.

(Graphic: Debt and expenditure jumps due to COVID