October 27, 2020

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The International Monetary Fund has told its member governments they can create millions of jobs and boost recovery prospects if they use higher public investment to respond to the severe economic challenge posed by Covid-19.

Ahead of its annual meeting this month, the Washington-based fund said historically low interest rates meant it was a good time to borrow for long-term infrastructure projects and said the spending would help tackle rising unemployment.

The IMF said the boost to jobs would be especially strong if governments planned for a green recovery.

Its analysis – contained in a chapter from its forthcoming fiscal monitor – showed that increasing public investment by 1% of national output would create seven million jobs directly and between 20m and 33m jobs via the knock-on effects on the rest of the economy.