IMF managing director says there is ‘no doubt’ that there will be another U.S. fiscal stimulus

The International Monetary Fund (IMF) managing director, Kristalina Georgieva said on Thursday that she wasn’t in doubt about another fiscal stimulus package by the U.S government.

She said that a second coronavirus economic stimulus package is much needed and it would have a positive impact on the economy whenever it is introduced. The IMF managing director added that if the fiscal stimulus were implemented earlier without much delay, it would “provide a boost to certainty and certainty is something” that is much needed in this pandemic.

Georgieva pointed out that the monetary policy of the U.S. Federal Reserve, alongside the U.S. government’s fiscal policy, are the “two levers” holding the U.S. economy. Adding that it would be “best if they are used together in combination.”

“We have to recognize that in the first round of action that was done very effectively and of course, it would be highly desirable that the fiscal lever is also put in place,” Georgieva said.

In the wake of the coronavirus pandemic in March, the U.S. government took strategic steps to ensure that the economy stays afloat. Some of the measures taken included slashing interest rates to near-zero, and the launch of a $700 billion quantitative easing program to support the economy. Shortly after, the Trump administration approved a fiscal stimulus package of $2 trillion which was released under the Coronavirus Aid, Relief, and Economic Security, (CARES) Act of 2020.

The first stimulus package provided small businesses with paycheck protection support, low-interest loans for businesses, student loan forgiveness, unemployment benefits, and direct check payment of $1,200 to Americans, amongst others. A second stimulus package is long over-due as many Americans continue to file for unemployment claims, and airlines have begun furloughing thousands of employees until further notice. It is unlikely that a second stimulus package will be passed before the November 3 election.

There has been much disagreements and arguments between Democrats and Republican lawmakers, over the amount of the next stimulus package. Democrats want the amount at $2.2 trillion because they believe injecting more money into the economy is the best decision to make. On the other hand, the White House is proposing a $1.8 trillion stimulus package. Treasury Secretary Steven Mnuchin said while he and President Donald Trump were tirelessly working to get the deal out soon, he fears that “politics” may have gotten in the way. He said Democrats are insisting on an “all or nothing deal.”

House Speaker Nancy Pelosi says President Trump isn’t taking the coronavirus pandemic seriously enough. She added that his unseriousness about the pandemic reflects in the low amounts he has proposed, so far. Pelosi describes it as “one step forward, two steps back.”