The International Monetary Fund’s No. 2 official on Tuesday, July 20,  called on countries to pivot from saving their economies from collapse to reviving growth-oriented policy reforms to boost their recovery prospects and make them more sustainable.

IMF First Deputy Managing Director Geoffrey Okamoto said in a blog posting on the IMF website that the Covid-19 pandemic delayed and reversed some pro-growth reforms and restoring these can help make up for output lost during the pandemic.

Reforms that allow for faster restructurings and resolution of unviable businesses and labor policies to help retrain workers and line them up with job openings can help shift workers and capital to more promising, dynamic parts of the economy, Okamoto said.

Improved competition policy frameworks such as those being debated in Europe and the United States can reduce the concentration of market power among a few firms and create more dynamic competition and innovation. “Using this moment for some of these difficult reforms means that the monetary and fiscal stimulus still flowing will serve as a springboard to a brighter and more sustainable future rather than a crutch to a weaker version of the pre-Covid-19 economy,” Okamoto said. “Seizing the opportunity could deliver years of solid post-Covid-19 growth and progress in living standards.”

The call for a renewed focus on reforms comes as the IMF is shifting from non-conditional emergency Covid-19 pandemic financing toward the negotiation of more traditional IMF loan programs, which require recipient countries to meet policy reform benchmarks.

                Source: Reuters