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IMF's Georgieva says U.S., China need to keep up coronavirus stimulus

Kitco News

WASHINGTON (Reuters) - The United States and China needed to keep up strong stimulus to help speed the global economy’s recovery from the novel coronavirus pandemic, International Monetary Fund Managing Director Kristalina Georgieva said on Thursday.

A faster recovery also depends on strong cooperation to develop and distribute COVID-19 vaccines evenly worldwide, but could add nearly $9 trillion to global income by 2025, Georgieva told a news conference after an IMF steering committee meeting.

“That in turn could help narrow the income gap between richer and poorer nations,” she said.

The United States has the fiscal space and monetary policy capacity to pump out more economic stimulus, its spending so far during the pandemic having had a very positive impact on the rest of the world and its influence “cannot be overstated,” she said.

Washington has pumped out around $3 trillion so far, leveraged by Federal Reserve lending and guarantee facilities, but negotiations on another round of stimulus between the Trump administration and Democrats in Congress have stalled and look unlikely to produce an agreement before the Nov. 3 elections.

Georgieva said it was up to U.S. authorities to decide the “exact sequencing” of any further stimulus, “but it has been an important positive impulse and we would like to see how it would be continued again.”

“We are of course keen to see that lifelines for businesses and for workers are sustained. This is our main message - don’t cut prematurely these lifelines,” Georgieva added.

She said China, the world’s second largest economy, has also provided a “potent stimulus” for the global economy, from fiscal spending, monetary policy and a strong recovery that has created demand for countries that supply it with commodities and supply chain components.

China’s joining international efforts to develop and widely distribute vaccines would boost confidence that the pandemic can be ended more quickly, Georgieva said.

“Until we have a durable exit from the health crisis everywhere, the recovery would remain uneven and uncertain,” she said.

Reporting by David Lawder and Rodrigo Campos; editing by Grant McCool

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