Transcript of the 2019 Annual Meetings IMFC Press Conference

IMF News, October 19, 2019

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Date: October 19, 2019
Speakers: Kristalina Georgieva (Managing Director, IMF); Lesetja Kganyago (Chairman, IMFC, Governor of the Reserve Bank of South Africa); Gerry Rice (Director, Communications Department, IMF)
Format: Opening remarks from the Chairman and the Managing Director, followed by questions from the press.

Global growth "continues but has slowed since the IMFC last convened in April."
Main challenges cited: trade tensions, geopolitical risks, and policy uncertainties.
Trade and growth:
- Trade tensions projected to shrink global GDP "by 2020" by "0.8 percent."
- Equivalent dollar impact: "about $700 billion."
- Trade growth in 2019 slowed to "1.2 percent," described as "almost standing still."
- The communiqué and discussion emphasized that the indirect impact of uncertainties matters more than the direct impact of tariffs.

Broad, shared view: apply an appropriate combination of tools—monetary policy, fiscal policy, structural reforms—to stop and reverse the slowdown.
Fiscal policy:
- Fiscal policy "should remain growth‑friendly and could contribute more, where there is space."
- Examples of countries with fiscal space cited in the World Economic Outlook: "South Korea, Germany."
- China "has taken some actions to stimulate the economy, on the basis of having some fiscal space."
- Germany: "putting forward a very sizable climate investment package" expected to "bring a significant boost in investments."
Monetary policy: "should be well anchored to influence inflation expectations"; central bank decisions "need to remain well communicated."
Financial stability: the IMFC "underscored the importance of monitoring and tackling, when necessary, financial vulnerabilities and risks to financial stability."
Structural reforms: reaffirmed "the need to advance structural reforms to lift growth and productivity."

Consensus: "a strong international trading system with well‑enforced rules would support global growth" and efforts should be enhanced "to reduce policy uncertainty."
Recognition that resolving major bilateral tensions (e.g., U.S.–China) and achieving predictability in trade would materially reduce uncertainty and support investment.
Discussion outcomes:
- Clarified the cost chain: trade tensions → uncertainty → slowing investment → slower growth → job losses → erosion of consumer confidence.
- Emphasis on peer pressure and adherence to the "trade rule book" and on updating rules to cover services and e‑commerce.

IMFC welcomed the Managing Director's Global Policy Agenda and endorsed a package on IMF resources and governance reform.
Resource package:
- Endorsement maintains "about $1 trillion to cushion any possible risks and to continue to be the sound center of the global financial safety net."
- Agreement to maintain the current resource envelope through "a doubling of the New Arrangements to Borrow, complemented by a reduced level of bilateral borrowing arrangements."
Quota reform:
- The communiqué "also mentioned the lack of progress in quota reform."
- The 15th General Review of Quotas "did not end up with an increase in quotas."
- Membership commitment: step into "the 16th General Review of Quotas, with a commitment to quotas being the most reliable financial foundation for the Fund."
Chair’s emphasis: the Fund is "a quota‑based institution" and permanent quota funding is preferred over borrowed resources, though borrowed resources play an important role while quotas are negotiated.

IMF stance: taking "a very balanced approach" to digital currency and stablecoins—assessing benefits (ease of use, cost savings, financial inclusion) and risks (privacy, abuse for illegal purposes, financing of terrorism, issues on sovereignty).
Work in coordination with other authorities: engagement with the FSB and the European Central Bank.
The Fund is "not specifically focusing on Libra" but is "looking into" the broader inevitability of expanding digital money and the necessity to do so "mindful of monetary stability."

Monetary unions:
- ECOWAS decision to create the Eco referenced; the creation of a common currency framed as a "political project" requiring deeper integration, potential fiscal and banking union preconditions, and political commitment.
- IMF engagement: following discussions in CEMAC and ECOWAS and "quite keen to support a best possible outcome as the discussions go on."
Broader development concerns:
- Recognition of the African Continental Free Trade Agreement as an important step toward continental integration.
- Concern that "most of the 45 countries that are going to grow even slower than the rest of the world are in sub‑Saharan Africa," implying a risk that the distance between advanced and developing economies "may expand."
- Priority actions for Africa identified: generate sustained growth, boost integration, digitalization (leapfrogging), invest in human capital and infrastructure, and strengthen links between countries on the continent.

Historic observation: "For the first time, the Chair of the IMFC and the Managing Director of the IMF are both from emerging market countries."
Managing Director expressed gratitude for IMFC endorsement of IMF resources and governance actions as "a vote of confidence."
Chair and Managing Director emphasized constructive, aligned discussions and the need for upgraded global cooperation to address shared challenges.

Transcript of the 2019 Annual Meetings IMFC Press Conference, October 19, 2019