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Prepare for rising interest rates, warns IMF head

May 7, 2021 at 5:42 pm

Sign outside the headquarters of the International Monetary Fund (IMF) in Washington, DC, 15 April, 2020 [SAUL LOEB/AFP via Getty Images]

The International Monetary Fund head on Thursday warned that policy support provided as part of measures to combat the COVID-19 pandemic should be withdrawn very carefully, saying countries need to prepare for higher interest rates, Anadolu Agency reports.

“It is especially important to monitor the US interest rates since there is significant movement there,” Kristalina Georgieva told an event organized by the European University Institute in Florence, Italy, via video conference.

She said the world economy painted a better picture in April, speaking of the US and China as “two engines working strongly.”

The IMF expects the EU to catch up with these two economies with help from vaccine rollouts this summer, she said.

Telling how the global economy is expected to grow 6 per cent this year and 4.4 per cent next year, Georgieva added that divergences in the recovery between different countries pose a serious problem.

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Underlining that uncertainty is also high, Georgieva said: “We are together in this, we can only get out of this together.”

Countries that have not yet recovered and face a high debt burden may find themselves in a difficult situation in an environment of potentially rising interest rates, she cautioned.

On the debates over waiving intellectual property rights for COVID-19 vaccines, she argued there are strong economic arguments for removing obstacles to vaccine production and distribution.

“But the removal of intellectual property rights protections should be accompanied by other measures,” she added.