Turkey, Russia outliers as developing nations turn to IMF for financial aid

Turkey and Russia are the notable exceptions among nine non-European Union emerging economies in central and eastern Europe as governments apply to the International Monetary Fund for financial aid during the coronavirus outbreak.

Many economies outside the EU lack the financial resources to put in place large fiscal and monetary expansions to cope with the emergency, Poul Thomsen, director of the IMF’s European Department, said in a statement on Monday.

Most of the countries have already applied for emergency assistance from a $50-billion pool available under the IMF’s rapid financial support facilities. They join more than 70 other member countries around the world in drawing on the low-conditionality cash to meet immediate financial pressures, Thomsen said.

“They all lack the depth of financial markets and the EU linkages that contribute importantly to policy space,” Thomsen said. “With limited access to external capital and smaller and less developed banking systems, many of these countries will find it difficult to finance large increases in their fiscal deficits.”

Turkish President Recep Tayyip Erdoğan has repeatedly rejected any notion of applying to the IMF for new assistance since a previous accord expired more than a decade ago. Russia last drew on a standby agreement with the fund arranged in 1999.

“More countries are likely to follow in what is already the largest number of requests for assistance ever received by the IMF at one time,” Thomsen said.

https://blogs.imf.org/2020/03/30/europes-covid-19-crisis-and-the-funds-response/

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