Executive Directors generally agreed with the ndings of the 2020 External Sector Report and its policy recommendations. ey noted that current account imbalances had narrowed
modestly in 2019, and that the overall con guration
of external positions on the eve of the COVID-19 pandemic implied persistent vulnerabilities and chal- lenges in addressing underlying structural distortions. Furthermore, stock imbalances have reached historic highs, with attendant risks to both debtor and creditor countries. Directors shared the view that, while current account imbalances are expected to narrow modestly in the near term, this outlook is subject to high uncer- tainty and cross-country variation.
Directors noted that excess current account imbal- ances continue to be concentrated in advanced econo- mies. ey reiterated that reducing excess imbalances in the global economy requires continued joint e orts on the part of both excess surplus and excess de cit countries.
Directors observed that the COVID-19 crisis has caused a sharp contraction in global trade, especially
in services, and tighter external nancing conditions
in the early stage of the crisis, with implications for external positions varying widely across countries. ey noted the exceptional policy responses on both the scal and monetary fronts. For economies dependent on commodities, tourism, and remittances, the adverse e ects on their economies and external positions
could be severe, likely requiring signi cant economic adjustment and nancing. Directors also noted with concern the recent rise in trade restrictions, especially on pharmaceutical and medical products.
Directors cautioned that a worsening of risk senti- ment could re-trigger capital ow reversals and cur- rency pressures, increasing risks of an external crisis for economies with preexisting vulnerabilities, such as large current account de cits, a high share of foreign currency debt, and limited international reserves.
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