You are here: Home » International » News » Economy
Business Standard

IMF urges infrastructure investment to boost post-coronavirus growth

The full Fiscal Monitor will be presented at the IMF and World Bank annual meetings

Topics
International Monetary Fund | Economic slowdown

Reuters  |  WASHINGTON 

Photo: Reuters
Photo: Reuters

By David Lawder

WASHINGTON (Reuters) - The Monetary Fund on Monday said member governments should seize a low interest rate opportunity to invest in infrastructure to drive recovery from the coronavirus pandemic and a shift toward greener energy.

The IMF said in chapters from it fiscal monitor that its research shows public investment in infrastructure, including investments in health care systems, digital infrastructure and addressing climate change can pay back more than two to one in economic growth within two years.

The full Fiscal Monitor will be presented at the IMF and World Bank annual meetings, which get underway next week and will provide an updated assessment of the pandemic's effect on the global

The IMF said increasing public investment by 1% of GDP in advanced and developing economies would grow their GDP by 2.7%, creating 7 million jobs directly, and between 20 million and 33 million jobs overall when considering the indirect macroeconomic effects.

"Even before the pandemic, global investment had been weak for over a decade, despite crumbling roads and bridges in some advanced economies and massive infrastructure needs for transportation, clean water, sanitation, and more in most emerging and developing economies," IMF Fiscal Affairs Director Vitor Gaspar said in a blog post.

He added that "low interest rates globally also signal that the time is right to invest" despite the Fund's frequent warnings about a massive buildup of debt in developing countries.

Some countries with tighter financing conditions will have to take a more gradual approach to scaling up infrastructure development, but the improved growth prospects could pay off if projects are well-managed and set the stage for future growth.

"Investment is now urgently required in sectors critical to controlling the pandemic, such as health care, schools, safe buildings, safe transportation, and digital infrastructure," The IMF said in its report.

The Fund said public investment in infrastructure is feasible and can be delivered quickly if governments invest in maintenance of infrastructure, review and restart projects that were shelved at the start of the pandemic, speed up projects in the pipeline and plan immediately for a post-pandemic investments.

It said official aid for adaptation to climate change would pay back more than 100% in growth, and there is a need to double a currently planned $10 billion to adapt countries to climate change to around $25 billion.

 

(Reporting by David Lawder; Editing by David Gregorio)

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

Dear Reader,


Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

First Published: Tue, October 06 2020. 08:15 IST
RECOMMENDED FOR YOU
.