

THE coronavirus pandemic has driven the global economy into freefall sparking a huge recession, reveals the International Monetary Fund.

The organisation's MD Kristalina Georgieva revealed it is now exploring options that go beyond its usual lending facilities to help bail out struggling countries.

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International Monetary Fund chief Kristalina Georgieva

"It is now clear that we have entered a recession – as bad as or worse than in 2009", she said in an online press briefing. "We do project recovery in 2021–in fact there may be a sizeable rebound, but only if we succeed with containing the virus...everywhere."

With the worldwide economic "sudden stop," Georgieva said the fund's estimate "for the overall financial needs of emerging markets is $2.5 trillion." But she warned that "we believe this is on the lower end."

"We are in an unprecedented situation where a global health pandemic has turned into an economic and financial crisis," she added.

"A key concern about a long- lasting impact of the sudden stop of the world economy is the risk of a wave of bankruptcies and layoffs that not only can undermine the recovery but can erode the fabric of our societies.

"To avoid this happening, many countries have taken far-reaching measures to address the health crisis and to cushion its impact on the economy – both on the monetary and on the fiscal side."

More than 80 countries have already have requested emergency aid from the IMF, Georgieva then revealed.

"Normally, we never have more than a handful of requests at the same time," she then added.

However, Georgieva said she’s heartened to see global leaders finally realising only a coordinated effort will help stop the spread of the killer virus.

“We have stated that the world is now in recession and that the length and depth of this recession depends on two things: Containing the virus and having an effective, coordinated response to the crisis,” she told CNBC.

“I’m very encouraged by what I see now. I see much clearer understanding (among global leaders) that if we don’t beat it everywhere we won’t be able to get out of it,” she added.

“We should not go ... with small measures now when we know that it is a gigantic crisis

“We’ve never seen the world economy standing still. Now we (do). How we go about revitalising it is another important topic.”

But she warned against stepping away from containment efforts too soon, adding, “There is no way to come to a strong recovery without strong containment.”

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The IMF - which works with 189 countries - has taken extraordinary measures in recent weeks to help combat the economic toll COVID-19 has had on economies around the globe.

Earlier this month the organisation said it “stands ready” to use its huge lending capacity to help countries around the world that are struggling with the humanitarian and economic impact of the pandemic.

Georgieva wrote at the time that the financial backing could be used to aid its members, especially emerging and developing countries.

She stated the IMF’s Catastrophe Containment and Relief Trust “can help the poorest countries with immediate debt relief, which will free up vital resources for health spending, containment, and mitigation.”

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Pakistan has already requested an emergency loan from the IMF to help fight the virus under the fund's Rapid Financing Instrument program, Georgieva revealed.

She did not identify the size of the loan, but under the programe, Pakistan would be able to borrow up to its full quota - about $2.76 billion - over two years, or $1.43 billion over a single year.

Pakistan already has an IMF $6bn Extended Fund Facility loan program and Georgieva said the Pakistani authorities "have reaffirmed their commitment to the reform policies included in the current arrangement."