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Yellen tells world's big economies: spend big, danger lurks

EconomyApr 08, 2021 02:35PM ET
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© Reuters. FILE PHOTO: U.S. Treasury Secretary Yellen attends economic briefing at the White House in Washington

By Andrea Shalal and David Lawder

WASHINGTON (Reuters) -U.S. Treasury Secretary Janet Yellen on Thursday warned of the risk of a permanent divergence in the global economy in the wake of the COVID-19 crisis, and urged major economies to inject significant new fiscal support to secure a robust recovery.

In a statement to the steering committees of the International Monetary Fund and the World Bank, Yellen underscored the need for major economies to continue supporting developing countries as they grapple with the COVID-19 pandemic, climate change and high debt burdens.

She urged the World Bank to help countries, particularly the world's poorest, get timely access to COVID-19 vaccines, and backed accelerated negotiation to replenish the World Bank's International Development Association fund for the poorest countries - a goal the bank aims to reach by December.

The United States had pledged $4 billion to the COVAX global vaccine distribution initiative, Yellen said, urging others to join in. She said Washington, which so far has only loaned vaccines to Mexico and Canada, was exploring sharing excess doses, but gave no details.

Yellen's comments reflect the Biden administration's focus on strong international cooperation to tackle global challenges - a sharp departure from the "go-it-alone" approach pursued by former President Donald Trump's administration.

"The (COVID-19) crisis has exacerbated the trend of rising income inequality, raising concerns about a divergent path within and across countries. We also face the existential threat of climate change. We can only resolve these problems through strong international cooperation," Yellen said in remarks prepared for her first meeting with the IMF's International Monetary and Financial Committee and the World Bank's Development Committee.

The former Federal Reserve chair said substantial fiscal and monetary support from major economies had improved the global economic outlook significantly, but more efforts were needed.

IMF Managing Director Kristalina Georgieva told reporters she was encouraged that the United States and China - the world's two largest economies - shared a consistent view about their recovery prospects, and their "recognition of the responsibility they have for positive spillover impacts."

"Like the passengers on a plane, on which we are all passengers, it is important that they work in synch. Then we can fly faster and we can get further," Georgieva said.

She said IMF members also heard that the Fed was committed to communicate well in advance of any faster return to normalized monetary policy - a change the IMF has warned could have unintended consequences for emerging market capital flows.

Yellen said Washington was implementing a $1.9 trillion COVID-19 relief plan and working on another large infrastructure package, urging other major economies to take similar actions.

"The job is not yet done, given high uncertainty and the risk of permanent scarring," she said. "I urge major economies to ... strive to provide significant amounts of new fiscal support to secure a robust recovery."

Yellen said developing countries should work with the IMF and World Bank on structural reforms and seek full-fledged IMF financing programs, which carry conditions, where necessary. Some countries may need deeper debt treatment, she added.

She called on all creditors to "fully and transparently" implement the Group of 20's new debt treatment framework and avoid "unnecessary delays that can prolong debt overhangs and exacerbate growth shocks."

She also urged the World Bank to lead on "transformative climate investments" and to continue to set an aggressive agenda on climate and the green recovery from the crisis.

Yellen tells world's big economies: spend big, danger lurks
 

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Comments (11)
danny Levine
danny Levine Apr 08, 2021 3:26PM ET
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this "unevenness" is caused by none other than you! shameless
Gu Qi
Gu Qi Apr 08, 2021 3:23PM ET
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one country is not enough now calling whole worlds...it is a real witch...sitting on top chair dont care the rest of people
Manish Manish
Manish Manish Apr 08, 2021 3:10PM ET
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what is robust recovery? markets @ ATH? All commodities @ ATH? Rich more Richer; Poor more poorer. No Jobs only unemployment. All these bureaucrats must understand that robust recovery means spending power to all and it will come with Job and employment to all. Not with just pushing power and money to big corporates and making Stock Markets @ ATH
Marco Loureiro Silva
Marco Loureiro Silva Apr 08, 2021 2:52PM ET
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This MMT is the most dangerous experiment in human history, and the Austrian School already provides enough proof that MMT is suicide.
Lawrenti Berija
Lawrenti Berija Apr 08, 2021 2:43PM ET
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another day another article promoting this terrible witch and her crazy ideas
Murali Brahmandam
Murali Brahmandam Apr 08, 2021 10:46AM ET
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they make them poor and then give them money to stay poor
Simon Meszaros
Simon Meszaros Apr 08, 2021 10:46AM ET
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thats the point. but in money world you dont create value but assign value. so there is no other option ...
danny Levine
danny Levine Apr 08, 2021 9:56AM ET
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printing money does not create value. it instead dilutes everyone
Izzy Dom
Izzy Dom Apr 08, 2021 9:51AM ET
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The Great Reset is in full swing. More economies and people relying on the few.
Izzy Dom
Izzy Dom Apr 08, 2021 9:51AM ET
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The Great Reset is in full swing. More economies and people relying on the few.
oeg vokar
oeg vokar Apr 08, 2021 9:06AM ET
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According FED statistic the gap between top 1% and bottom 50 % from 35-60 times during Obama/Yellen era....and 17-20 times under Trump. And Yellen is still pretending to help poor!!! It's called big, fat lie. https://www.federalreserve.gov/releases/z1/dataviz/dfa/distribute/chart/#quarter:124;series:Net%20worth;demographic:networth;population:1,3,5,7;units:levels
Picaso Fish
Picaso_Fish Apr 08, 2021 9:06AM ET
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umn, please stop making things up. Thank you!
oeg vokar
oeg vokar Apr 08, 2021 9:06AM ET
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Picaso Fish  Only for you again, see the FED"s data please https://www.federalreserve.gov/releases/z1/dataviz/dfa/distribute/chart/#quarter:124;series:Net%20worth;demographic:networth;population:1,3,5,7;units:levels
Mox Mox
Mox Mox Apr 08, 2021 8:56AM ET
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Meanwhile black Americans ********each other at alarming growing rates and white Americans die of drug use. but Yellen doesn't give a thing about them
 
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