IMF Managing Director Kristalina Georgieva said the fiscal costs of actions aimed at containing the pandemic and mitigating its economic fallout were driving up already high debt levels, but it was premature to start withdrawing needed safety nets.
“We are not out of the woods yet,” she said in a blog posting ahead of Saturday’s virtual meeting of finance ministers and central bank governors from the Group of 20 major economies.
The IMF last month further slashed its 2020 global output forecasts, predicting a 4.9% contraction and weaker-than-expected recovery in 2021.
Georgieva said $11 trillion in fiscal measures by G20 members and other countries, as well as massive central bank liquidity injections, have put a floor under the global economy.
Even so, dangers lurked, she said, including a major new wave of infections, stretched asset valuations, volatile commodity prices, rising protectionism and political instability.