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Dear maria, In today's edition we focus on how the IMF is updating its policy advice to meet new challenges, the IMF's proposal for ending the pandemic, making rent affordable in Europe, taxing multinationals in Europe, a new upcoming issue of Finance & Development, and much more. On that note, let's dive right in. THE FUTURE OF IMF POLICY ADVICE The global economy is changing fast. So are the challenges countries face, whether it's the still ongoing pandemic or the existential threat of climate change. The IMF is responding too as it modernizes the way it provides its regular policy advice to member countries--a process known as surveillance. To confront these changes, the Fund’s policy advice is evolving, both on substance and in the way the Fund engages with its members, the IMF's Fabian Bornhorst and Ceyla Pazarbasioglu write in a new blog. The new direction of this key pillar of IMF work is highlighted in the 2021 Comprehensive Surveillance Review, recently approved by the Fund’s Executive Board. It outlines four priorities: confronting risks and uncertainties, preempting and mitigating spillovers, fostering economic sustainability, and a unified approach to policy advice. What it means in practice: Regular economic assessment reports will be more focused, and better integrate macrofinancial aspects, risk assessment and contingency planning, spillovers, and capacity development. New technologies and enhanced data availability will help to modernize business practices and enhance the relevance of surveillance. Policy advice will also become more granular and country-specific.   Watch a short video below explaining the IMF's new approach to regular policy advice. Read the full blog here or visit the IMF's Comprehensive Surveillance Review website.   A PROPOSAL TO END THE PANDEMIC IMF Managing Director Kristalina Georgieva continued her appeal for a groundbreaking new proposal that could bring the pandemic substantially under control worldwide through a pragmatic plan for funding vaccine access. "The most important message of our proposal is a coordinated effort up front can bring enormous benefits. Between now and [20]25, the world economy can benefit by $9 trillion if we accelerate the exit from the pandemic, of which 60 percent will go to the developing world, 40 percent to rich countries," she said in an interview with Bloomberg. The proposal developed by the IMF's Gita Gopinath and Ruchir Agarwal sets the goal of vaccinating at least 40 percent of the population in all countries by the end of 2021 and at least 60 percent by the first half of 2022; tracking and insuring against downside risks; and ensuring widespread testing and tracing, maintaining adequate stocks of therapeutics, and enforcing public health measures in places where vaccine coverage is low. "When we look at it from from an IMF perspective, our duty is to tell our members how they can be more prosperous," Georgieva said in an interview with the BBC. "Well, one way to be more prosperous is get out of this pandemic as fast as you can. We have seen it. Just to make a point that this is not so out of out of reach."  Watch a short video to hear Gopinath and Agarwal explain the proposal. THE PATH FORWARD During a discussion this week with the Washington Post's David Ignatius, the Managing Director shared two key lessons from the pandemic: First, in good times, invest in strong fundamentals. Second, we have to expand our definition of resilience--invest in resilient people, a resilient planet, and resilient economies None of the problems we had before the pandemic–like low productivity and high inequality–have gone away. Coming out of the crisis, we have to invest in enhancing productivity, and be much more determined to work together, Georgieva said. MAKING THE RENT MORE AFFORDABLE IN EUROPE Even before the pandemic, many store or restaurant workers living in a major city in Europe had to spend more than half of their household’s income on rent. During the pandemic, many of them have seen their incomes fall, pushing up their share of income going to rent. Since low-income and young renters tend to work more frequently in contact-intensive sectors or hold insecure jobs, government policies are needed to make sure that these households do not get left behind as economies recover from the COVID-19 crisis, the IMF's Alfred Kammer, Andrea Schaechter, and Andreas Tudyka write in a new blog. In our recent study of 17 advanced European economies, a typical renter household spent about 25 percent of its income on rent in 2018, while a young family paid nearly one-third of their earnings on renting. For a household in the lowest 20 percent of the income distribution, the share of income needed for rent was much higher, at 40 percent--the threshold at which a household is considered overburdened by rent payments. Policies to make rental housing more affordable:  -Effective policies should include efforts that enhance long-term income opportunities for low-income households and the young.  -The most powerful immediate policy tool is to raise the levels and coverage of portable housing allowances, which can be used flexibly across locations.  -Governments should also launch initiatives that increase the supply of affordable housing. Read the full blog here.  Watch Kammer and Schaechter discuss rental affordability in Europe with members of the European Parliament's Committee on Employment and Social Affairs. TAXING MULTINATIONALS IN EUROPE The IMF's Vitor Gaspar and Victoria Perry discussed this week how countries can better coordinate their corporate tax policies. The presentation at a conference of the European Economic and Social Committee came on the heels of the release of a new IMF Departmental Paper on taxing multinational companies in Europe by the IMF's Ernesto Crivelli, Ruud A. de Mooij, J. E. J. De Vrijer, Shafik Hebous, and Alexander D Klemm. Gaspar said the unique institutional structure in the EU—with its objective to fully integrate goods, labor, and capital markets—demands deeper forms of coordination among its member states to address the challenges of tax competition.  Watch the event here. GENDER, MONEY AND FINANCE ICYMI, IMF Managing Director Kristalina Georgieva took part in the 1st Vienna Economic Dialogue on Gender, Money, and Finance, on Thursday, May 20. The Managing Director joined Christine Lagarde, President, European Central Bank, for a discussion on Gender and Economic Policy-Making.  Georgieva said German Chancellor Angela Merkel is the woman who has had the biggest impact on her. She recounted a past visit by Merkel, who was then Germany's environment minister, to the World Bank with an all-woman delegation. Georgieva, then an environmental economist, noted she was one of the few women representing World Bank staff.  "That picture was embedded in my brain. And it actually led me to recognize that I personally have a responsibility to step up, that women have to take charge," she said. "I have one message to women that are listening: support other women." The discussion was preceded by remarks by Barbara Kolm, Vice-President of the General Council, Oesterreichische Nationalbank (OeNB) and Robert Holzmann, Governor, Oesterreichische Nationalbank (OeNB). A livestream of the remarks and discussion can be accessed here. The conference is hosted by the Oesterreichische Nationalbank (OeNB) in cooperation with SUERF – The European Money and Finance Forum and the Joint Vienna Institute (JVI). More information about the conference can be found here. F&D: THE NEW MORALITY OF DEBT Society has long debated the morality of debt. In ancient times, debt was viewed in many cultures as sinful, with lending at interest especially repugnant. These concerns continue to influence perceptions of lending and the regulation of credit markets today. Nikita Aggarwal is a research associate at the Digital Ethics Lab at Oxford University's Internet Institute. In this podcast, Aggarwal says our increasingly online lives prove a valuable source of data for lenders and add new dimensions to debt’s morality. Her article, The New Morality of Debt, is published in the March 2021 issue of Finance and Development Magazine.  NEW F&D ISSUE: WHAT NEXT FOR EMERGING MARKETS The COVID-19 pandemic has been a momentous test for emerging markets. This diverse group of countries has been hit by the crisis to varying degrees and face different challenges. Some countries, like China, were able to contain the virus relatively quickly and have managed to grow despite the odds. Others could be struggling to deal with the aftereffects of the pandemic for years to come. The June edition of Finance & Development explores several cross-cutting issues affecting this group of countries, including debt sustainability, market turbulence, prospects for growth, and the pandemic’s effect on inequality. Click here to read the new issue when it is released Wednesday, June 2 at 12 p.m. ET. IMF AROUND THE WORLD The IMF Executive Board this week announced the conclusion of Article IV economic assessment consultations with Luxembourg and Slovenia.  IMF staff also concluded an Article IV mission and second review for the 12-month Stand-By Arrangement for Egypt. Staff also concluded virtual missions to Uruguay and the Central African Republic. RESPONDING TO THE CRISIS: To date, 86 countries have received more than $110 billion in financial assistance in response to the economic impact of the COVID-19 crisis. Find out more in our  lending tracker, which visualizes the latest emergency financial assistance and debt relief to member countries approved by the IMF’s Executive Board.  Overall, the IMF is currently making about $250 billion, a quarter of its $1 trillion lending capacity, available to member countries. Looking for our Q&A about the IMF's response to COVID-19? Click here. We are also continually producing a special series of notes—about 100 to date—by IMF experts to help members address the economic effects of COVID-19 on a range of topics including fiscal, legal, statistical, tax and more. HAVE YOUR SAY Thank you again very much for your interest in the Weekend Read. We really appreciate your time. Please feel free to provide any feedback on our efforts to update the layout and readability of the newsletter. Sincerely, Adam Behsudi Deputy Editor, IMF Weekend Read abehsudi@IMF.org     Dear maria, We just published a new blog—please find the full text below. Translations coming soon.   Making Affordable Rental Housing Part of Europe’s Recovery By Alfred Kammer, Andrea Schaechter, and Andreas Tudyka Already before the pandemic, many store or restaurant workers living in a major city in Europe had to spend more than half of their household’s income on rent. During the pandemic, many of them have seen their incomes fall, pushing up their share of income going to rent. Since low-income and young renters tend to work more frequently in contact-intensive sectors or hold insecure jobs, government policies are needed to make sure that these households do not get left behind as economies recover from the COVID-19 crisis. Worrying trends During the past decade, rental housing has become less affordable across many European economies. In our recent study of 17 advanced European economies, a typical renter household spent about 25 percent of its income on rent in 2018, while a young family paid nearly one-third of their earnings on renting. For a household in the lowest 20 percent of the income distribution, the share of income needed for rent was much higher, at 40 percent. This number—40 percent—is generally the threshold for a household to be considered overburdened by rent payments. It is jarring that in nearly three quarters of the countries analyzed, about half or more low-income renters were overburdened in 2018. The rates were particularly high among the 16-29-year-olds and in major cities. During 2013–18, in some capitals rental price increases surpassed country-level rent growth by multiple times, for example, in Lisbon, Dublin, Madrid, Reykjavik, Stockholm, and the City of Luxembourg.   In contrast to renters, housing costs for homeowners have dropped since 2014. A renter typically spends over one and a half times what a homeowner spends on housing when measured as a share of disposable income. And this discrepancy has widened between 2011–13 and 2016–18, particularly for the poorest—those in the bottom 20 percent of the income distribution—by about 4 percentage points. This is shown by the green bars in the chart. That means, while homeowners generally benefited directly from the low interest rates during this period, renters did not.   Reasons behind rising rental affordability pressures Our analysis finds that rising economic output did not translate into disposable income gains that compensated sufficiently for rising rental costs, particularly for low-income households. In addition, greater urbanization, structural transformation toward high-skilled employment in services, and a higher incidence of tourism have increased affordability pressures for renters, especially those with lower incomes. In other words, poorer households have not been able to reap much of the benefits of their changing and growing economies. The pandemic is likely making matters worse Many people who rent are particularly vulnerable to the COVID-19 crisis as they work more frequently in contact-intensive industries, are in the early stages of their career with little job security, and generally have lower access to telework. Their incomes are expected to take several years to recover, and a return to normal will likely take longer for those who need to transition into new sectors. Lower rental costs would partly offset these income losses, but so far, rent reductions have been observed mostly in some tourist hotspots and mainly for high-end properties. Moreover, it is highly uncertain how widespread and long-lasting behavioral changes that could moderate rental costs would be. As a result, the trends of economic divergence and inequities that were already in place before the pandemic will likely intensify.   Policies to make rental housing more affordable Addressing rental affordability is difficult because housing policies are complex. They often address multiple goals, among which affordability, well-balanced landlord-tenant regulations, and equal access to opportunities are only some aspects. In general, effective policies should include efforts that enhance long-term income opportunities for low-income households and the young, so that they benefit from the structural transformation of the economy. The most powerful immediate policy tool is to raise the levels and coverage of portable housing allowances, which can be used flexibly across locations. This measure lends itself to quick deployment and effective targeting. It would provide support during the recovery and beyond, and reduce the rent expenses of low-income families anywhere in the private market. Governments should also launch initiatives that increase the supply of affordable housing to alleviate demand pressures more permanently. In particular, governments could invest more in social rental housing—accommodation that is provided at subsidized rents—especially where the stock has been falling and is low. They could also adjust financial incentives, for example, by taxing vacant properties and shifting some housing subsidies away from those that favor high-income homeowners toward private investment in rental housing development. In the European Union, funding from the Next Generation EU package provides an opportunity to make investment in social housing and public infrastructure an integral part of the pandemic recovery strategy. Greater housing investment would support inclusive growth by creating employment, providing more affordable rental housing and facilitating access to jobs across locations. The pandemic is expected to worsen the affordability of rental housing and inequality trends that were already present before COVID-19 hit Europe. Governments need to step up efforts urgently to avoid low-income renters and the young from being left further behind. This blog draws on a joint paper by Khalid Elfayoumi, Izabela Karpowicz, Jenny Lee, Marina Marinkov, Aiko Mineshima, Jorge Salas, Andreas Tudyka, and Andrea Schaechter. Alfred Kammer is the Director of the IMF's European Department. Andrea Schaechter is an advisor in the IMF’s European Department.  Andreas Tudyka is an economist in the IMF's European Department. Thank you again for your interest in IMF Blog. Read more of our latest content here. Take good care, Glenn Gottselig Blog Editor, IMF GGottselig@IMF.org