IMF chief warns against premature withdrawal of economic support policies

IMF chief Kristalina Georgeva tells European Parliament event that fiscal policies supporting the post-pandemic recovery should be accompanied by reforms to make economies greener and more digital

The NextGenerationEU is a €750 billion temporary recovery instrument to help repair the immediate economic and social damage brought about by the coronavirus pandemic
The NextGenerationEU is a €750 billion temporary recovery instrument to help repair the immediate economic and social damage brought about by the coronavirus pandemic

Cutting economic support policies prematurely could harm the post-COVID-19 recovery, the International Monetary Fund managing director has warned.

Kristalina Georgeva, however, said fiscal policies should be accompanied by structural reforms to make economies greener and more digital.

She was addressing a panel of experts that discussed EU economic governance and measures to protect and help economies affected by COVID-19. The event was organised by the European Parliament.

Georgeva also warned of the dangers of uneven recovery among different countries, even within the EU.

European Parliament President David Sassoli said the crisis brought on by the pandemic, “stemmed from an economic system heavily based on the exploitation of crucial resources”. He said this highlighted the unsustainability of such an economic model.

Sassoli said EU funding and reconsideration of economic governance instruments would be important factors in the bloc’s recovery and transformation.

European Council President Charles Michel argued that “EU funds and policies crafted to deal with the pandemic must be designed around the needs of the young generation, which has suffered considerably”.

European Commission President Ursula von der Leyen said the potential of the Next Generation EU funds could be integral for shaping greener, more digital, and more inclusive EU economies. She said national parliaments must play a constructive role in turning these EU funds into local growth.

The NextGenerationEU is a €750 billion temporary recovery instrument to help repair the immediate economic and social damage brought about by the coronavirus pandemic.

The EU’s long-term budget, coupled with NextGenerationEU, is said to be the largest stimulus package ever financed through the EU budget. A total of €1.8 trillion is proposed to be given out to rebuild a post-COVID-19 Europe.

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