WASHINGTON (Reuters) – Coordinated action is needed to arrest and begin to reverse the expanding numbers of fragile states, International Monetary Fund Managing Director Kristalina Georgieva said on Monday.
Georgieva told a panel at the fall meetings of the IMF and World Bank the COVID-19 pandemic had exacerbated problems in states that were already more vulnerable to problems such as extreme poverty, droughts, rising food prices and, in some cases, war.
“We have to have the humbleness to recognize that the universe of fragile states has been expanding, and unless we commit to bring all our forces together, we will not arrest or reverse that trend,” she said.
Georgieva said economic trends were diverging for advanced economies and all developing countries, but the gap was far more stark for fragile and conflicted-affected states, which saw real gross domestic product per capita decline by 6.6% in 2020.
These countries also saw a bigger increase in public debt and were expected to face more inflationary pressures, but had a hard time raising revenues.
Support from the international community was critical to help fragile states and reverse the growing divergence, she said, noting that the IMF had provided $7.5 billion to support to support fragile states.
The IMF’s recent allocation of $650 billion in new Special Drawing Rights included $16.2 billion in funds for these countries, she said.
(Reporting by Andrea Shalal; Editing by Chris Reese & Shri Navaratnam)