The international Monetary Fund’s Chief said, the world faces greater extent of uncertainly and potential turbulence this years as countries economic recovery momentum slows globally with risks from inflation and bottlenecked supply chain.
The IMF is preparing for a potential increase in demand for its lending this year as central banks tighten monetary policy and after many developing countries increased their debt, Managing Director Kristalina Georgieva said at a virtual event on Wednesday. Disaffection with two years of economic upheaval from the pandemic could lead to greater unrest in some countries, she said.
Central banks face a “delicate balancing act” between fighting inflation and supporting an economic recovery, Georgieva said. The spillover of monetary policy tightening on emerging markets “can add fuel to the fire of divergence” between advanced and developing economies, she said.
“We have to be prepared that there may be more turbulence,” Georgieva said in an online event hosted by the Center for Global Development, a Washington-based think tank.
Last year IMF allocated record $650 billion in reserves for its 190 member countries which the agency called special drawing rights. The fund is also dedicated $168 billion to help 87 countries to deal with pandemic downside.
