Half of the world has asked for bailout, IMF chief says
The global economic downturn caused by the coronavirus pandemic has been so severe that already half of the world has asked the International Monetary Fund for a bailout, the organisation’s chief said Wednesday.
“This is an emergency like no other. It is not because of bad governors or mistakes. For that reason, we are providing funding very quickly,” Kristalina Georgieva told CNBC’s Sara Eisen on CNBC’s “Squawk Alley.”
“We are asking for one thing only: Please pay your doctors and nurses, make sure that your health [care] systems are functioning, and that vulnerable people and first responders are protected.”
Georgieva’s comments came after the IMF said Tuesday it expects the global economy to contract by three per cent this year, adding the world could see a 1930’s style recession. The fund had forecast a 3.3 per cent economic expansion for 2020 in January.
Georgieva noted the global economy could expand by 5.8 per cent in 2021 if the virus is contained and new cases start to recede. However, she added the total global economic output would be less than in 2019 even with such a jump. Economic output could also be worse if the virus takes a “double trip” around the world.
“It’s the first time in the history of the IMF that epidemiologists are as important as macro economists for our projections,” Georgieva said.
“We are really hoping our scientists will not disappoint us.”
More than three million coronavirus cases have been confirmed globally, according to Johns Hopkins University. In the US alone, over 600,000 cases have been confirmed.
Maldives has also sought assistance from IMF.
Details of the bailout sought by the Maldives are unclear, but the country’s finance minister told reporters last week that his government was looking to borrow from its Special Drawing Rights (SDR) quota of $21.2 million.
The coronavirus outbreak has hit the Maldivian economy hard, as travel restrictions and other preventive measures affect the country’s lucrative tourism industry, which contributes the bulk of the island nation’s state revenue and foreign reserves.
Before the pandemic, the government had been bullish about tourism prospects, targeting two million, high-spending holidaymakers this year after last year’s record 1.7 million.
However, tourist arrivals saw a year-over-year decline of 22.8 per cent in the first 10 days of March. Officials say the number of tourist arrivals to the Maldives could drop by half in 2020.
All international airlines have suspended scheduled operations to the Maldives, as the island nation enforced a blanket suspension of on-arrival visa in late March in a bid to combat the spread of the novel coronavirus.
Even before the visa suspension, the Maldives had closed its borders to arrivals from some of the worst-hit countries, including mainland China, Italy, Bangladesh, Iran, Spain, the United Kingdom, Malaysia and Sri Lanka. Visitors from three regions of Germany (Bavaria, North Rhine-Westphalia and Baden-Württemberg), two regions of France (Île-de-France and Grand Est) and two regions of South Korea were also banned from entering the country.
All direct flights to and from China, Italy, South Korea and Iran were also cancelled.
Cruise ships and foreign yachts were also banned from docking at any of the country’s ports.
With arrival numbers falling and the visa suspension in effect, several resorts across the Maldives had been closed.
Tourism has been the bedrock of the Maldives’ economic success. The $5 billion-dollar economy grew by 6.7 per cent in 2018 with tourism generating 60 per cent of foreign income.
However, the government is at present projecting a possible 5.7 per cent economic contraction this year — an estimated $778 million hit.
On March 8, Maldives reported its first cases of the novel coronavirus, as two hotel employees tested positive for Covid-19 at a luxury resort in the archipelago.
Eighteen more cases — all foreigners working or staying resorts and liveaboard vessels except five Maldivians who had returned from abroad — were later identified.
A three-case cluster, detected in Male Wednesday, confirmed community transmission of the coronavirus and put the number of confirmed coronavirus cases in the Maldives to 23.
However, 16 out of the 23 have made full recoveries. Six Maldivian patients are being treated at designated quarantine facilities, whilst another two had been repatriated to their home country of Italy.
The Maldives announced a state of public health emergency on March 12, the first such declaration under a recent public health protection law.
The public health emergency declaration has allowed the government to introduce a series of unprecedented restrictive and social distancing measures, including a nationwide closing of schools, colleges and universities. Non-essential services and public places in the capital such as gyms, cinemas and parks have also been shut.
Restaurants and cafes in the capital have been asked to stop dine-in service and switch to takeaway and delivery.
A nationwide shutdown of all guesthouses, city hotels and spa facilities located on inhabited islands is also in effect.
Following Wednesday’s confirmation of community transmission, capital Male is in lockdown for 24 hours, as health authorities conduct contact tracing in one of the world’s most densely populated cities.
The lockdown bans all public activity and transport in capital Male and its suburbs of Hulhumale and Villimale for a day. Any movement in and out of the city and its suburbs as well as the neighbouring industrial islands of Thilafushi and Gulhifalhu are also banned.
Note: This article contains reporting by CNBC.