Transcript of the 2019 Annual Meetings IMFC Press Conference

October 19, 2019


Kristalina Georgieva, Managing Director, IMF

Lesetja Kganyago, Chairman for the International Monetary and Financial Committee (IMFC)

Gerry Rice, Director, Communications Department, IMF


Mr. Rice ‑ Hello, everyone. Good afternoon. Welcome to this press conference on behalf of the IMFC.

We are delighted to have with us today the Chairman of the IMFC, Mr. Lesetja Kganyago, who is, as you all know, the Governor of the Reserve Bank of South Africa. We also have with us the Managing Director of the IMF, Kristalina Georgieva.

We are going to make a few opening remarks, and then we will get to your questions. If you can keep them short and to the point, we will take as many as we can.

I think you all have the communiqué, so we can take that as a given.

With that, I will ask the chairman to make some opening remarks, followed by the Managing Director.

Mr. Kganyago ‑ Thanks, Gerry. Good afternoon. Thank you for coming. And let me thank Kristalina Georgieva for hosting our meetings at IMF headquarters. I want to welcome her, on behalf of the IMFC, and wish her the very best as Managing Director.

It has been mentioned that her appointment is historic. Today is historic, too. For the first time, the Chair of the IMFC and the Managing Director of the IMF are both from emerging market countries. So this press briefing is, at the very least, a noteworthy event. I look forward to working with Kristalina on the challenges ahead.

As you can see from the communiqué, global growth continues but has slowed since the IMFC last convened in April. Trade tensions, geopolitical risks, and policy uncertainties remain among the most significant challenges on this expansion. These were a cause for concern widely cited by the membership.

We agreed that a strong international trading system with well‑enforced rules would support global growth and that we would enhance our efforts to reduce policy uncertainty.

We also discussed the policies necessary to sustain global growth. We agreed that fiscal policy should remain growth‑friendly and could contribute more, where there is space. At the same time, ensuring debt sustainability is important. Where needed, consolidation should continue in a carefully caLibrated manner and safeguard social objectives. Monetary policies should be well anchored to influence inflation expectations. And we generally agreed that central bank decisions need to remain well communicated. The IMFC also underscored the importance of monitoring and tackling, when necessary, financial vulnerabilities and risks to financial stability.

We also reaffirmed the need to advance structural reforms to lift growth and productivity. More broadly, the communiqué points to areas of emphasis in our joint efforts to strengthen international frameworks and cooperation.

Today we emphasized a few areas for action, including trade, taxation, debt transparency, and sustainable finance. We stressed the need for the IMF's member countries to upgrade global cooperation and facilitate solutions to global challenges.

The IMFC welcomed the Managing Director's Global Policy Agenda as well. The communiqué touches on areas of IMF operations from that agenda that are of importance in the period ahead.

An important development to note is that the membership has reaffirmed its commitment to a strong, quota‑based, and adequately resourced IMF to preserve its role at the center of the global financial safety net. Yesterday we announced the package on IMF resources and governance reform. We agreed that the current resource envelope of the IMF should be maintained through a doubling of the New Arrangements to Borrow, complemented by a reduced level of bilateral borrowing arrangements. We will revisit the adequacy of quotas and continue governance reform as part of the Sixteenth General Review of Quotas.

Kristalina, would you like to say more?

Ms. Georgieva ‑ Well, thank you very much. I would like to make three very simple, straightforward points.

First, to thank my friend Lesetja for his able chairing of the meeting and even more for his guidance to me, as this has been my first meeting. Thank you.

Second, to add my voice to recognize and welcome the high‑level endorsement by the IMFC of the package of actions on IMF resources that allows us to maintain about $1 trillion to cushion any possible risks and to continue to be the sound center of the global financial safety net. This, together with commitments on governance, makes the Fund strong at a time when there are some clouds on the horizon over the global economy.

And third, to express my gratitude to the Governors for their engagement. I was very impressed by the commonality in views expressed and the alignment between the positions of the Fund on the status and outlook of the world economy and the actions that need to be taken and the views expressed by the Governors.

Mr. Rice ‑ Thank you very much.

Let's take some questions. OK. I am going to go to the second row, please.

Question ‑ Hello, everyone. Two questions for you, Ms. Georgieva.

The first one, could you tell us what are, according to you, the main outcomes from this meeting this week?

And the second question is about Libra because yesterday, the G20 asked the IMF to assess the implications for the member countries. So do you have anything to tell us about what the IMF could do concerning Libra?

Ms. Georgieva ‑ Well, thank you. Thank you for these questions.

What the meetings clearly indicated was a shared concern of the membership of the increased uncertainty for the global outlook in the world economy, as well as an understanding that actions on trade tensions, as well as on possibly finding a resolution on Brexit can help reduce these uncertainties.

As you know, we presented a report, that trade tensions are putting a significant dent on global GDP. By 2020, it would shrink by 0.8 percent. This is the equivalent of about $700 billion.

Within this, the direct impact of tariffs is the relatively smaller part. The indirect impact of uncertainties is, actually, what matters the most. And during the meetings, there was quite a lot of discussion around how to reduce uncertainties.

Secondly, there was a very clear commonality of views. And it came as an outcome of some very constructive discussions, that all the tools that can be applied ‑‑ monetary policy, when there is space for it, fiscal policy, structural reforms ‑‑ that countries need to pursue an appropriate combination so that they can stop and, even better, reverse the slowdown.

And three, the meetings delivered, as I said at the beginning, an endorsement of the financial resources for the Fund. And that is a very strong demonstration that the membership values the Fund. And I take it as a vote of confidence for my colleagues and for me.

To your second question, the Fund has been engaged quite extensively with others, like the FSB [Financial Stability Board], the European Central Bank, on the question of digital currency, stablecoins: What are the benefits? And what are the risks? We take a very balanced approach. We look at the ease of use, cost savings, and most importantly, financial inclusion as very important benefits. But we are also very mindful that they can be a risk for privacy, consumer privacy. They could be abused for illegal purposes and, in the worst case, for the financing of terrorism. And there are issues on sovereignty that need to be well understood and addressed. And in that sense, we will continue to work. We are not specifically focusing on Libra. We are looking into, one, the inevitability of expanding digital money on the wave of the digital revolution, but then the necessity to do so, mindful of monetary stability.

Mr. Rice ‑ Thank you so much. I am going to go to the far right here, thank you.

Question ‑ Thanks very much.

I have a question for the Managing Director, please. You mentioned the need for fiscal stimulus. Which countries have fiscal space to lead the rollout of fiscal stimulus?

Ms. Georgieva ‑ Well, we have pointed out in the World Economic Outlook countries that do have space for fiscal stimulus. Among them, South Korea, Germany. We also heard from our membership, others that see that they are in a position, with some more space. And what was very positive to hear during the meetings is that countries with fiscal space are, actually, taking measures to stimulate the economy.

Germany, for example, is putting forward a very sizable climate investment package that would bring a significant boost in investments. They are also looking into what more could be done, if necessary. By the same token, South Korea is deploying some space. China has taken some actions to stimulate the economy, on the basis of having some fiscal space.

Mr. Rice ‑ Thank you. I am going to take the lady in the third row here.

Question ‑ Thank you, Gerry.

Good morning, Ms. Georgieva. You mentioned the endorsement of financial resources for the Fund, but the communiqué also mentioned the lack of progress in quota reform. Could you elaborate more on why is there a lack of progress? And what would be the timeframe to be expecting the reform?

Ms. Georgieva ‑ Thank you. And I want to thank all of you in this room that are pronouncing my so difficult last name so well. I appreciate that.

We regret that the 15th General Review of Quotas did not end up with an increase in quotas. Quotas is the ‑‑ that is the financial strength of the Fund, the permanent resources available to the Fund. However, we are encouraged by the commitment to ensure that the Fund's financial resources are maintained at the level around $1 billion ‑‑ I am sorry ‑‑ $1 trillion. A minor difference.


And we are even more encouraged by the fact that there is a broad consensus in the membership, that we will step into the 16th General Review of Quotas, with a commitment to quotas being the most reliable financial foundation for the Fund.

And maybe this is the time for the Chair to perhaps comment, since these are shareholder matters. And we always enjoy the shareholders taking a view on those.

Mr. Kganyago ‑ Well, you have asked for the resources. We have availed the resources. And we expect you to deploy the resources.

The Fund is a quota‑based institution. And as a quota‑based institution, we would like to have the quota as permanent funding, being the crucial funding for the IMF, rather than just the borrowed resources. But the borrowed resources play a very important role because, whilst we are busy negotiating quotas, we must make sure that the IMF has got adequate firepower; that, should the need arise, the IMF is adequately resourced to deal with that.

Ms. Georgieva ‑ And that we have, thank you.

Question ‑ Do you think that the international monetary system is a fair system, in particular, regarding African countries? And if it is fair, why? If it is unfair, how can you fix it to be fair?

And I have a very short second question. There is currently a program of monetary unifications in the continent of Africa. You have a group of ECOWAS [Economic Community of West African States] countries that have decided to create the Eco, a common currency, next year. Also, the problem of the African Union with a single African currency. So what is the point of view of the IMF on these unifications? In particular, creating the Eco will go against the CFA franc.

And I would like, please, Madam and the panelist, if any of you could give us the economic justification of the CFA franc system, which some African scholars are seeing as a real handicap for economic progress.

Mr. Kganyago ‑ I will leave Kristalina to talk about the fairness, or otherwise, of the international monetary system. It is difficult to say because you just say asked: Is it fair? But she will deal with that.

The issue of monetary unifications, there are two important things to deal with here.

One is, you must understand the issue of the currency union is a political project. Just in the same way that the euro was a political project, the creation of a monetary union on the African continent would have to be a political project. There are important learnings and there are preconditions that must be met. And as the lessons from Europe show us, if you are to create a monetary union, you actually need deeper integration. You need to ask questions about a fiscal union. You need to ask questions about a banking union. And all of these things are complex. That does not stop various regions on the continent from embarking on a monetary union. So the fact that ECOWAS has decided to go ahead and to do these things, if it meets all the preconditions, I am sure that they could go ahead with it, as long as there is political commitment, political commitment to it.

Ms. Georgieva ‑ Let me add to this answer.

We have both CEMAC [Communauté Economique et Monétaire de l’Afrique Centrale] and ECOWAS at a stage where they are looking for their monetary union in the future, as we just heard. And the question is really for these countries to figure out, what would serve their economies the best? The decision is not taken. Consultations among the countries are ongoing. What is important is that they can anchor their currency in a way that facilitates price stability and that it is beneficial for their economies. How would they go forward, given that there are two ongoing discussions, is something that the IMF is following up and is quite keen to support a best possible outcome as the discussions go on.

Now, you asked a question about fairness. I think we need to broaden it beyond the monetary system and think about the African continent and its presence and its future. The African nations have taken a very, very important step forward through the African Continental Free Trade Agreement. This is going to be a foundation of integration in the region ‑‑ in the continent, actually, not in the region ‑‑ in the continent. There is a long way to travel, but the first step has been taken. And to my mind, what is so very important for Africa is to reach its full potential.

Today, what we have is, we have some countries that are going very strong, and some countries that are lagging behind. In fact, it was very disturbing, heartbreaking to see that most of the 45 countries that are going to grow even slower than the rest of the world are in sub‑Saharan Africa. What does that mean? It means that the distance between advanced economies and developing economies, instead of shrinking, may expand. So I think the issue of the monetary system is an important one, but a much more important issue is to generate sustained growth and to boost the integration in and within the African nations right on digitalization, leapfrog on that basis, invest in the human capital of the continent, invest in the infrastructure of the continent. And more than anything else is the links between the countries on the continent, if I may.

Mr. Rice ‑ Thank you so much. I think we have got time for maybe one more. In the front row here.

Question ‑ Ms. Georgieva, you mentioned just now that that one of the discussions was about ways to reduce some of the uncertainty that is slowing down the global economy.

I am just wondering what solutions you might have come up with in those discussions. And is there really anything that is possible that is short of resolving fully the trade tensions between the U.S. and China? We would also like to get the chairman's perspective on this as well.

Ms. Georgieva ‑ As we are all aware, there has been progress in the discussions between China and the U.S. And, actually, that was a topic that both countries very openly commented on and commented on in a very positive manner. That, on its own, is important; but as I said, the issue is not just the tariffs. The issue is, do we have predictability for trade in the future? We know that this year, trade slowed down to 1.2 percent. This is almost standing still. And in that sense, trade does not play its role as an engine for growth.

We need to look into, what are the reasons we are not making more progress on trade. And those are not just the relations between the U.S. and China. We all know very well that the economy today is much more a service economy, an e‑commerce economy, but these are areas that trade agreements have a hard time to cover.

So in the discussions here, what we advanced was the understanding of, what are the issues that need to be addressed and building more, if you wish, peer pressure for everybody to play by the trade rule book and be willing to expand and improve this rule book.

Mr. Kganyago ‑ Just very quickly. There cannot be winners in a trade war. In the end, the biggest loser is going to be the global economy. And in a way, when you think of trade protectionism, it is actually so illogical. You want access to other countries' markets, but you do not want them to have access to yours.

And when you talk about the global economy, the lifeblood of the global economy is, actually, global trade. And in the aftermath of the 2008 financial crisis, the focus of the global community was to get trade, international trade going once again and looking at what has constrained trade finance and all of that stuff because we understood that, at the heart of the global economy is, actually, global trade.

And the way in which this thing is actually coming ‑‑ you think of it that you had trade tensions. The trade tensions impacted on global trade. And because you have impacted adversely on global trade, you impact adversely on the global economy. And because you are impacting on the global economy, you cause uncertainty and, as such, investment does not take place. And because investment is not taking place, the economy is not growing, jobs are lost. And that is what you are actually going to get yourself into. These trade tensions are not in the best interest of the global economy.

Ms. Georgieva ‑ I apologize for coming in once again. But that was a big chunk of our discussion in these meetings.

The advancement that has been made during the meetings is in two ways.

One, up to now, we have been talking about the cost of a trade war. Now we know how much and who incurs these costs. And it is everybody. Everybody loses.

Two, what the meeting did was to very clearly build the cost consequence chain from trade tensions to uncertainty; from uncertainty to the slowing down of investments; from there to a reduction of growth; from there to a potential erosion of jobs; from there, to an erosion of consumer confidence.

We know that today, in countries that are doing relatively well, the consumer segment is doing well, but the manufacturing is already feeling the impact of this slowing down of investments. Well, when you follow this chain, what is the next shoe to drop? It would be consumer confidence. And I believe that there has been a very strong echo in the room of an understanding that policymakers, out of enlightened self‑interest, ought to take very seriously their obligation to international cooperation in trade.

And with my apologies for being so extensive. You are now almost in the room with us at the meeting.

Mr. Rice ‑ Thank you so much, Managing Director. Thank you, Mr. Chairman. Thanks to all of you. We will see you next time.

Ms. Georgieva ‑ Thank you.

IMF Communications Department


Phone: +1 202 623-7100Email: