Transcript of Kristalina Georgieva’s Participation in the World Health Organization Press Briefing

IMF News, April 3, 2020

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Canonical URL: Transcript of Kristalina Georgieva’s Participation in the World Health Organization Press Briefing

Date: April 3, 2020
Speaker: Kristalina Georgieva, Managing Director, International Monetary Fund
Key framing:
- "This is a crisis like no other." The world economy has come to a standstill; "We are now in recession."
- The IMF's role: "to protect the health of the world economy" while WHO protects health; both must act in unity.
- Dual imperative: "saving lives and protecting livelihoods ought to go hand in hand."

Emerging markets and developing economies are "hard hit" with weaker health systems and capital outflows.
Exact figures and comparisons:
- "Nearly 90 billion dollars has flown out." — characterized as "way more than during the global financial crisis."
- "Over 90 countries have been placing requests to the IMF" for emergency financing.

IMF mobilization:
- The IMF has "a one trillion dollars war chest" and is "determined to use as much as necessary" to protect economies from scarring.
- Emergency financing: unprecedented and growing demand; "we have never seen ever such a growing demand for emergency financing."
- Objective to "double what normally is being provided as emergency financing."
- Concessional terms: emergency financing includes "a de facto grant component" especially for vulnerable countries.
Support for the poorest members:
- Raising grant financing to cover IMF debt dues via the Catastrophe Containment and Relief Trust (CCRT).
- China has contributed to the CCRT and is "constructively engaged" on debt standstill discussions.

IMF actions and appeals:
- Mobilizing grant funds so poorest members "don't have to use scarce resources today" to service IMF obligations.
- Joint appeal with the World Bank to official bilateral creditors for a "standstill on debt service" while economies are at a standstill.
- Suggested duration for debt-service standstill to official creditors: "for a period of one year."
Engagements and process:
- Coordination with G20, Paris Club, IMF, World Bank to advance discussions by Spring Meetings.
- China has proposed principles for the process and is participating in the CCRT.

Central bank and fiscal actions in advanced economies described as "unprecedented" and materially stabilizing markets.
IMF focus areas:
- Rapidly step up financing for countries, especially emerging market and developing countries with growing needs.
- Consider instruments that are missing from the global defense system, while staying within IMF mandate.
Specific instruments discussed:
- Revisiting allocation of additional SDRs [Special Drawing Rights] as was done in 2009 — described as a form of "boost[ing] liquidity" and "mostly useful for emerging markets and developing countries."
- Current membership direction: "use everything you can use right now fast" — immediate priorities include stepping up emergency financing from "50 to 100 billion [dollars]" and ensuring readiness to deploy the "one trillion" lending capacity as the crisis evolves.
IMF not pursuing actions "beyond the mandate of the Fund that traditionally we have been exercising" but members have raised broader ideas, including mechanisms akin to "quantitative easing for the world."

Highest risk identified: "a wave of bankruptcies and layoffs that would make the recovery from this crisis harder."
Vulnerability asymmetry: the economic crisis "hits vulnerable economies the hardest," analogous to how the virus hits vulnerable people hardest.
Urgent need to protect "the most vulnerable people and firms so they can hold on to their workers."

Prioritize health expenditures and protect health workers: "please, prioritize health expenditures, use money to pay doctors and nurses, make sure hospitals function."
Protect livelihoods and firms to avoid long-term scarring: direct support to vulnerable people and firms, strengthen social safety nets, and protect SMEs to enable recovery.
Provide fiscal space via debt relief measures:
- Use CCRT grant financing to cover IMF debt dues for poorest members.
- Seek a one-year standstill on debt service from official bilateral creditors to free resources for pandemic response.
Enhance global liquidity provision:
- Advanced-economy central banks to offer swap lines and repo operations to stabilize emerging markets.
- IMF to consider instrument innovations such as a short-term liquidity line and revisit SDR allocation if membership supports it.

Integrate epidemiology and economics: "bringing together epidemiology and economics is absolutely crucial."
Optimistic closing: "we will get through this. But how fast and how effectively will depend a lot on actions we take."
IMF commitment: "The commitment of my institution, the IMF, is to play our part."

Transcript of Kristalina Georgieva’s Participation in the World Health Organization Press Briefing, April 3, 2020. International Monetary Fund.