WASHINGTON: One of the key lessons from the Chinese experience so far is that it is important for macroeconomic policy to focus on mitigating the economic impact of the COVID-19 shock and supporting the recovery, said an International Monetary Fund (IMF) official.
“In China, we are seeing a strong fiscal effort focused on helping vulnerable households and small firms most affected by the outbreak while monetary policy remains very accommodative,” Helge Berger, the IMF’s China mission chief and assistant director in the Asia and Pacific Department, told media in a recent email interview.
Berger noted that the People’s Bank of China has ensured ample liquidity in financial markets and for banks, lowered policy rates, and worked hard to channel credit to firms under pressure and to facilitate the production of medical supplies. “This is the right approach,” he said.
In a blog he co-authored, Berger and two other IMF officials argued that China’s experience so far has shown that the right policies make a difference in fighting the COVID-19 pandemic and mitigating its impact, though some of these policies come with difficult economic tradeoffs.
Berger told Xinhua that mitigating the impact of a severe shock like this requires providing support to the most affected — the vulnerable households and smaller firms.
“Here policymakers should continue to look for ways to reach them — for example, by waiving taxes, fees, or utility bills and channeling credit through fintech firms,” he said.
Safeguarding financial stability in times like this requires assertive and well-communicated action, Berger said. – Agencies
