IMF chief seeks more help for low-income countries

WASHINGTON: The head of the IMF on Friday urged advanced economies to provide more resources to low-income countries, warning of an emerging “Great Divergence” in global growth that could risk stability and trigger social unrest for years to come.

International Monetary Fund (IMF) Managing Director Kristalina Georgieva told reporters that 50% of developing countries were at risk of falling further behind, which raised concerns about stability and social unrest.

To avert bigger problems, she said rich countries and international institutions should chip in more. She also urged heavily indebted countries to seek debt restructuring sooner rather than later, and to boost conditions for growth. “Last year the main focus was on the ‘Great Lockdown.’ This year we face the risk of ‘Great Divergence,’” Georgieva told reporters during a video conference.

“We estimate that developing countries that have been for decades converging in income levels will be in a very tough place this time around.”

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Setbacks for living standards in developing countries would make it much more difficult to achieve stability and security for the rest of the world, she said.

“What is the risk? Social unrest. You can call it a lost decade. It may be a lost generation,” she said.

Georgieva said advanced economies had spent about 24% of GDP on average on support measures during the pandemic, compared to 6% in emerging markets and 2% in low-income countries.

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