Calls for even vaccines distribution
Emma Ujah, Abuja Bureau Chief
The International Monetary Fund has said that the approval and rollout of vaccines have boosted expectations of a global recovery and lifted risk asset prices, despite rising COVID-19 cases and softening economic activity, not only in late 2020 hope of greater prospects in 2021.
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The organization, however, said in its Global Financial Stability Report, released yesterday, that“Until vaccines are widely available, the market rally and the economic recovery remain predicated on continued monetary and fiscal policy support.”
According to the Fund, inequitable distribution of vaccines risks exacerbating financial vulnerabilities, especially for frontier market economies.
It said, “An ongoing rebound of portfolio flows provides better financing options for emerging market economies facing large rollover needs in 2021.
“Policy accommodation has mitigated liquidity strains so far, but solvency pressures may resurface in the near future, especially in riskier segments of credit markets and sectors hit hard by the pandemic. Credit concerns and profitability challenges in the low-interest-rate environment may weigh on banks’ ability and willingness to lend in the future.”
The IMF therefore advised policymakers to continue to provide support until a sustainable recovery takes hold, warning, “under-delivery may jeopardize the healing of the global economy.”
It said, however, that with investors betting on a persistent policy backstop and a sense of complacency permeating markets as asset valuations rise further, policymakers should be cognizant of the risks of a market correction.
“With monetary policy anticipated to remain accommodative in coming years, policymakers should address rising vulnerabilities to avoid putting growth at risk in the medium term”, the organization said.
It said that financial markets have looked beyond the global resurgence…
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