The International Monetary Fund (IMF) since the start of the pandemic has provided $267 billion in new financing.
“And thanks to the collective will of our membership, we provided a record $650 billion allocation of special drawing rights, boosting our members’ reserves. This allowed many vulnerable countries to maintain access to liquidity, freeing up resources to pay for vaccines and health care,” an IMF Blog by Managing Directors Kristalina Georgieva, says.
“Fragmentation could make it even more difficult to help many vulnerable emerging and developing economies that have been hard hit by multiple shocks.’
She says that they are now helping countries with stronger reserves to channel their SDRs to countries whose need is greater. This pragmatic measure could make all the difference in many countries. So far, we have around $40 billion in SDR pledges to our new Resilience and Sustainability Trust, which will help low- and vulnerable middle-income countries address structural challenges such as pandemics and climate change.
“In other words, we know the global issues that matter most, and we know that confronting fragmentation in these vital areas is essential.”
Pragmatic measures to fight fragmentation may not be the simple sword swipe that cuts the Gordian knot of global challenges. But any progress we can make in Estimates of the cost of fragmentation from recent studies vary widely.
“The longer-term cost of trade fragmentation alone could range from 0.2 % of global output in a limited fragmentation scenario to almost 7 percent in a severe scenario—roughly equivalent to the combined annual output of Germany and Japan. If technological decoupling is added to the mix, some countries could see losses of up to 12 % of GDP.
And emerging and developing economies would no longer benefit from technology spillovers that have boosted productivity growth and living standards. Instead of catching up to advanced economy income levels, the developing world would fall further behind.
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