Transcript of Press Briefing by Kristalina Georgieva following a Conference Call of the International Monetary and Financial Committee

March 27, 2020

Kristalina Georgieva, Managing Director, IMF

Gerry Rice, Director, Communications Department, IMF


Gerry Rice I'm delighted to have you with us this morning director of the IMF, Kristalina Georgieva, who has just completed a conference call with the International Monetary and Financial Committee, which is the governing body of the IMF. You may already have seen the statement from Kristalina and the chairman of the IMFC, which was sent to you earlier. I think you understand we're doing the press conference this morning a little bit differently. You all know the circumstances we're facing. I mean, we really appreciate your patience. Thank you for that. And thanks to all of you who sent so many questions in advance. We'll get to as many as we can. And for those of you who wish to send a question online, we'll try and get to those as well. So with no further ado, I want to turn to Kristalina Georgieva who will make some opening remarks and then we'll turn to your questions. Thank you, Kristalina.

Kristalina Georgieva Thank you all very much for joining us. Gerry just said the governing body of the IMF, the International Monetary and Financial Committee, representing our 189 members met today virtually to discuss the unprecedented challenge posed to the world by Covid -19. Following yesterday's G20 leaders meeting, the IMFC took stock of the rapidly developing health crisis, its impact on the economy, measures taken to address this impact and how well the fund is equipped to help its members. I noted that since the IMFC's last call just weeks ago, we have reassessed the prospects for growth for 2020 and 2021. It is now clear that we have entered a recession as bad or worse than in 2009.

We do project recovery in 2021. In fact, there may be a sizeable rebound, but only if we succeed with containing the virus everywhere and prevent liquidity problems from becoming a solvency issue. A key concern about a long-lasting impact of the sudden stop of the world economy is the risk of a wave of bankruptcies and layoffs that not only can undermine the recovery. But can erode the fabric of our societies. To avoid this from happening many countries have taken far-reaching measures to address the health crisis and to cushion its impact on the economy, both on the monetary and on the fiscal side. The G-20 yesterday reported fiscal measures totaling some five trillion dollars or over 6 percent of global GDP. It is very important for those ahead in taking action to share their experience with those still behind. To support this last night the IMF launched a policy actions tracker for 186 countries to help us all see who is doing what. We will be updating this information regularly, will provide country-specific analysis in line with our surveyor's mandate. I invite you to visit our Website,, where you will find the policy tracker. We have seen an extraordinary spike in requests for IMC emergency financing. Over 80 countries have placed requests. And more are likely to come. And normally we will never have had more than a handful of requests at any one time. Yesterday, our executive board approved the first of those requests for the Kyrgyz republic in a record first disbursement.

We also see a wide range of problems building up in emerging markets. We used the meeting to zero in on this group of countries. The spread of the virus, the shutdown of economies, capital outflows and, for commodity exporters, a price shock.

Many of these emerging markets will experience a contraction as a necessary containment measures take all that will happen, and they are already shocked by reduced global demand for their exports, for tourism, for commodities, for manufactured goods that provide critical stream of foreign exchange. Our current estimate for the overall financial needs of emerging markets is 2.5 trillion dollars. We believe this is on the lower end. We do know that their own reserves and domestic resources will not be sufficient. And it is in this context that our members are asking us to do more, doing better, do it faster than ever before, and do it in collaboration with the World Bank and other international financial institutions, which we fully embrace.

So how can we meet these challenges? First, we are proposing to double our emergency financial capacity, simplify our processes, fill the gap in our concessional financing. Second, we are reviewing our lending instruments to see what might be missing in the context of this crisis so that we can respond appropriately. For example, can we expand the use of precautionary credit lines? Can we bring forward short term liquidity provisions? What we want is: countries to approach the fund and access the tools they require for the needs they have. The sooner they do it, the sooner they obtain necessary financing, the sooner they implement good policy. The better chance we have to contain the damage and move towards recovery. Third, many of our member countries are faced with rapidly building pressures on debt, which they need to address. On that note, our board yesterday approved changes in the application of the Catastrophic Containment and Relief Trust, which can provide some debt relief to our poorest member countries. We are seeking support from the membership to increase the capacity of the CCRT. We have received pledges of support from UK, Japan and China and we hope others to join quickly.

Last but definitely not least, we need urgently to secure the borrowing capacity of the fund through new arrangements to borrow and bilateral borrowing arrangements. In this context, it is very encouraging that NAP approval is part of the US stimulus package that is before the US Congress. We need other countries that have not yet completed their domestic procedures to follow suit so we have the whole 1 trillion lending capacity of the Fund at the disposal of our members.

So what are the next steps? The IMF charged us to discuss these various options further with our executive board with a view to having a concrete package of proposals for IMFC consideration at the spring meetings. Just in a few weeks’ time, to be exact, on April 16. So it is all hands on deck at the IMF. We are working very hard to strengthen our response capacity as much as possible. We have been successfully working now more than 10 days virtually. And I'm so proud of my staff for being able to adjust to new modalities of operation and step up what we do. Thank you.

Gerry Rice Thank you very much, Kristalina Let me just clarify before we turn to your questions since we are streaming live right now, there is no embargo. So disregard what I said at the beginning because we're actually streaming life. So feel free to report and we will actually send Kristalina's remarks, what she just said, will send these out to you shortly. Again, for the ease of your reporting. Let me turn to your questions.

There are several questions on the issue of recession from Xinhua and from Mohamed al Mizell [sp], Gulf News and others. But let me take those, too, from those two sources. So Mohammed of Gulf News is asking, do you expect a global recession due to the economic impact of the pandemic? And Xinhua is is asking, the IMF predicts, a global economy to contract this year. Do you think we are ready for such a recession? And Mohammed is actually asking, is there any plan for the Middle East countries in particular to offset the outbreak of the economic fallout? So perhaps we could take that bucket of questions on recession.

Kristalina Georgieva Unfortunately, we are projecting recession for 2020. We do expect it to be quite deep and we are very much urging countries to step up containment measures aggressively so we can shorten the duration of this period of time when the economy is in standstill. And also to apply well-targeted measures, primarily focusing on the health system to absorb that enormous stress that comes from coronavirus. And on people, businesses and the financial system, I am very pleased to say that when we went through countries' responses, that sense of targeted fiscal measures is there and are also very impressive to see the size of these measures. Countries are doing all they can on the fiscal and on the monetary front. We have heard from our members' very impressive decisions taken over the last days. We also want to caution that as we are responding now, we want to make the recession as possibly short and not too deep. We also want to think about what is going to follow the recovery and make sure that we are putting forward measures that can be supportive in this regard.

For the Middle East: just to mention that yesterday we've have approved the big package for Jordan, 1.3 billion dollars. Actually, the day before. The days are now blurring with 24/7 actions. We have approved the package for Jordan, 1.3 billion dollars, very, very important for the country in this particularly challenging time. We have received a large number of requests, including from the Middle East for emergency financing. Just to give you the order of magnitude, we have primarily low-income countries coming fast. Understandably, they are going into a very tough time before this shock is to hit them. Some 50 of the requests are from low-income countries, but we also are seeing middle-income countries engaging very actively and we encourage them to do so.

Gerry Rice Thank you very much. There are a series of questions around the G-20 and its role in the crisis. Xinhua asks: The G-20 leaders held a conference call regarding the pandemic. Can you comment on the result of the G-20 conference call? And what role do you expect G-20 countries to play in the global fight against the disease?

Kristalina Georgieva The G20 leaders call brought the countries representing 85 percent of the world economy together to focus actions and coordinate among themselves with very strong concentration on the immediate task of containing the health crisis. There is a clear commitment from the G20 countries to make sure that they mobilize their collective capacity on the medical front, that trade in medical supplies is not constrained and that they share experience so action can be more impactful. They are also bringing together the package of measures on the monetary and the fiscal front. They are coordinating these measures to again to increase their impact in terms of concrete objectives to follow up. The finance ministers of the G20 are tasked to come very quickly together with an action plan. We international organizations are drawn in terms of the collective response, our engagement on the policy front and on financing and also in terms of making sure that this action plan is robust and effective.

Gerry Rice Thank you very much. There's a series of questions also specifically on emerging markets, and I'm seeing a question here from Rafaelle [sp] in Argentina and also from People's Daily China. So asking: the IMF considers it important to support emerging markets and developing economies as well to overcome the shock of the crisis. What specific measures will the IMF take to support the emerging markets and developed developing economies and people's daily also ads? And how do you view the role of China's economy in helping to stabilize the global economy?

Kristalina Georgieva We we are very much on the view that we ought to focus on emerging markets and developing economies. Many of these countries are somewhat behind in terms of the epidemic and its domestic impact. What some are already stepping in this face, but they are all tremendously negatively impacted and will be impacted even more in the future.

What we are particularly concerned with is that they are experiencing domestic shocks. They are also experiencing a very significant impact of reduction in demand for their exports, especially tourism, manufacturing goods in this incredible standstill that the world economy finds itself. On top of it, they have suffered big capital outflows. Some 83 billion dollars had left emerging markets and they for those days are commodity exporters. There is also this additional hit of the drop of commodity prices.

So how can we support emerging markets and developing economies? One, we are mobilizing for them the one trillion dollars lending capacity our shareholders have equipped us with. Two, we are concentrating on rapid response to the emergency financing requests we are receiving. As I said, 81 requests, 50 from lower-income countries, 31 from middle-income countries. We want to make sure that countries have access to financing as soon as possible. And three, we are working specifically on the tremendous burden that is falling on the shoulders of low-income countries of poor countries. Many of them have not been in a strong position made before this crisis. Many of them with high level of debt.

Engaging on that particular issue of debt sustainability is something that we have been working with the World Bank on. We want to see attention given to countries in debt distress early before it turns into a big problem for them as well as for the rest of the world economy.

On the Chinese economy. Sorry, on the China economy. China is ahead of the rest of the world in terms of being impacted by the coronavirus. Having taken containment measures with a huge drag on growth in their first quarter, they are now stepping up production. And by doing all this, not only they are marking a path from health crisis to recovery, but they are offering tremendous expertise and experience to the rest of the world. They are also now a very important source of health supplies and health experience that they are sharing with the rest of the world. Of course, China doing better in 2020, is very important for China. It is also very important for the rest of the world given China's share in the world economy.

Gerry Rice Thank you very much. I'm seeing online a number of questions from the Financial Times, James Wheatley. So I'm gonna take those. James is asking a slew of questions, some of which I think have already been answered. But let me just reiterate these questions. Which countries have requested assistance from the IMF? Have they made concrete requests or just inquiries? What's the split between large, small, low middle income? Again, we've responded to some of these. What are the IMF calculations on resources that may be needed to meet their needs? Does the IMF have an estimate of the value of debt relief proposed by the IMF and the World Bank? And there's a question about does the Fund expect the private sector to be involved in debt relief?

Kristalina Georgieva All great questions. Starting from the request, whether there are inquiries or requests. Out of the 81 we have received, three-quarters are requests and one quarter are inquiries. But we are quite confident that these inquiries are going to be turning into requests, given the fact that the situation in the world economy and individuals countries is not getting better, it is getting worse. I have already answered the split between the low- income countries, 50 of the requests are requesting parties are from low-income countries, 31 from middle-income countries.

In terms of the resources needed. We are still working on assessing exactly what is the size of the need. As I mentioned in my opening at this point, a very conservative low-end estimate of the overall financial needs of emerging markets is 2.5 trillion dollars. Let me stress a big part of this can and will be covered by domestic resources. And we are also working on establishing exactly how much that would be. But clearly, clearly the domestic resources are insufficient and this is why it is so important that the IMF mobilizes rapidly with the appropriate type of instruments to respond to this crisis. And one specific issue we are looking into is this question of liquidity. Forex liquidity. Can we expand our capacity and tools to be able to provide rapidly liquidity to emerging market countries? On the debt relief question, if we take all IDA countries, International Development Association countries, in other words, those that the World Bank considers low income by their classification. The official that on an annual basis to be serviced by these countries is just around $11 billion dollars, slightly less than 11 billion dollars. Approximately half of this is debt of countries already at high debt distress.

How we are going to approach this, of course, depends not just on us. It depends on the official creditors. And there are already discussions in the G-20 as well as in the Paris Club as to what would be an appropriate process that rapidly gets into a practical approach to prevent these countries in this time when the economy is coming to a standstill to fall off the debt cliff. In other words, to fall into an inability to serve their debt.

The sooner we do it, the better. Whether this would involve private creditors at this point of time, we have not discussed it. But I can assure you that assure you that the same way the Fund during the global financial crisis brought together both official creditors and private creditors to assess a good pathway through a dramatic crisis, we have to do it this time around as well. And it is an area in which our membership is encouraging us to move to move forward.

Gerry Rice Thank you. This is actually gonna be the last bucket of questions and it's on the U.S. and Fox Business. Jennifer Schoenberg has a number of questions. Excuse me, has a number of questions and online FFP Delphine to tweet who is also asking a U.S. question. Let me come to those. Is the U.S. in recession? How severe of a contraction do you see here in the United States? What kind of unemployment levels could we see in the U.S.? How much will the 2 trillion stimulus package help U.S. GDP? So that's all from Fox. And on top of that, AFP is asking again on the 2 trillion. Lots of economists say much more will be necessary beyond the 2 trillion. What do you think, managing director?

Kristalina Georgieva As Chairman Powell said, actually, I think it was yesterday. The U.S. is in recession, as is the rest of the advanced rest of the advanced economies world. And in a big chunk of developed and emerging markets in developing economies. How severe? We are working now on our projections for 2020. In a short while prior to the Spring Meetings, we will come up with these projections. And at that time, we will have assessed more thoroughly the data that is now coming on the impact of containment on the economy. Let me just stress that while containment is the main reason for the economy to stand still and get into a recession. 

Containment is very necessary to come out of this period and step in to recovery. Until the virus is not contained, it would be very difficult to go to the lives we love.

And in that context that you're asking on unemployment and other and other factors. We are assessing very carefully any now projections. We will be able to answer this questions, as you would appreciate. We are seeing the early impact of this containment measure in the United States and elsewhere. And we are working towards a more deliberate assessment. We don't want to rush with our numbers. It is very important to be prudent in taking the,. If I can use a health terminology, taking the temperature of the economy. On the 2 trillion package: very welcome step by the US for two reasons. One, because it is absolutely necessary to cushion the world's largest economy against an abrupt drop of economic activities.

It is very important for the American people. It is also important for the rest of the world, given the significance of the United States. Second, very welcome because it is well-targeted. First, beef up the capacity of the health system. A hundred and seventeen billion dollars for hospitals. Second, helping workers and their families to be protected against a sudden loss of income so they can meet their daily needs. Third, protecting firms, large companies and SME's - small and medium sized companies. Protecting them is so critical. They stay afloat. Then when recovery comes, momentum can be injected very quickly.

And this is being done with an eye to actually insentivize companies to keep their workers on the payroll. There they would benefit if they do so. Last but not least, the measures that are there to protect the financial system. Would that be sufficient? We only can answer this question when we know how long it takes to contain the pandemic.

Gerry Rice Thank you very much. Look, as I said, we will be releasing a Kristalina Georgieva's remarks. We will be releasing the video of this press conference and the transcript very soon. And there is no embargo, so feel free to report immediately. I want to thank Kristalina Georgieva for joining us today. And I want to thank all of you for joining us today, especially in this virtual setting. We look forward to seeing you again soon at the IMF. And just wishing everyone to stay safe. Thank you very much.

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