Managing Director Georgieva’s Remarks at the World Food Program Executive Board
November 16, 2020
It is my great pleasure to join today’s meeting of the World Food Program Executive Board -- thanks for inviting me.
And heartfelt congratulations to the World Food Program for well-deserved recognition with its Nobel Peace Prize.
I have seen firsthand the incredible dedication of the staff of the World Food Program. In fact, one of the transformative moments in my own life came in a visit to the Sahel together with World Food Program counterparts.
I vividly remember this trip. I came from my home country of Bulgaria after spending time with my (at that time) toddler granddaughter – a healthy baby girl.
And then together with my colleagues from the World Food Program, we walked into a clinic for malnourished children.
We were in a room with over forty boys and girls. And what was so heartbreaking was how quiet this room was. The kids were so weak. Not only could they not laugh – they couldn’t even cry.
This deafening silence in a room full of children made it so crystal clear to me why a world free of hunger is a moral imperative – and why the World Food Program is so right to beat the drum up the message that hunger is the world’s greatest solvable problem.
But unfortunately, as we are gathering today, it is not yet solved. And even worse, because of COVID-19, what we see is the danger of children, women, and men being pushed to the border and beyond of their very existence. This danger is growing.
I cannot thank you enough for bringing us together so we can work together towards achieving a transformative moment in our human history.
That is at the heart of what this meeting today is about. We all as organizations – the World Food Program, the UN, the IMF, and the World Bank – we are all created with a common objective. And this common objective is to improve the lives of people.
We ought to bring our comparative strength towards this objective.
And what I want to do first is identify the comparative advantage of the IMF in working with other organizations in this extraordinary time when we are fighting the worst recession since the Great Depression.
And then second, what does this mean specifically for actions in 2021, which is going to be a very tough year, and how do we integrate in these actions the very pressing topic of debt sustainability?
The IMF’s Comparative Advantage
So first, what is the contribution of the IMF?
What we bring to this partnership of multilateral organizations are three parts of our mandate that are unique and contribute to the greater public good.
One, we are the organization that monitors the pulse of the world economy – to analyze conditions in each and every country and trends in countries and globally, and then to provide advice on how best to use resources at the country level.
And I want to particularly stress how we are bringing the international community together in some of the most vulnerable countries. In the note that we have today, there were specific examples, such as Liberia and others. More than ever, we have to deploy our skills for the benefit of prioritizing action.
Secondly, we are the world’s first responder at the time of economic crisis, and we take this mandate to heart.
In this crisis we have already deployed support for 82 countries, and 49 of them are low-income countries. Never in our history have we done so much, so fast – and rightly so. And I want to stress that we see a role for the Fund to continue with program support for countries that need it.
And third, we have a role to help prioritize spending.
Over the last years, we have taken this particularly to heart when it comes to social spending. And there the collaboration with counterparts is most visible – when we consult on social safety nets and priorities to protect the vulnerable. It is organizations such as the World Food Program that make implementation of these priorities viable.
The Path Forward
What does this all mean for us in 2021?
First, we have a very pressing need especially in low-income countries to make sure there is fiscal space for countries to act, to buffer the risks coming from COVID-19, and to recover from this crisis.
And in terms of fiscal space, let’s be very clear: advanced economies are in a much better place than low-income countries. Just to give you the numbers: in 2020, advanced economies on average deployed 20 percent of GDP in fiscal action and monetary support, emerging markets, 6 percent, and low-income countries 2 percent. In other words, advanced economies do whatever it takes, and low-income countries do as much as they can – what they can afford to do.
That takes me to my next point. As we think about fiscal space, we also need to recognize that some of these countries are under tremendous debt distress.
They came into the crisis in a difficult place and they are being hit hard by this crisis. More than half of low-income countries are now assessed to be at high risk of debt distress or in debt distress.
I want to recognize David Malpass. David and I have called for debt service suspension. The G20 embraced it. The G20 also came up with a common framework for debt treatments.
And it is particularly important for Africa, because Africa is facing a dramatic economic hit. This year, African economies will grow at negative 3 percent. In other words, they will shrink – the first time in decades this is happening.
Even worse is that for 2021 we project global growth at 5.4 percent for the world but only 3 percent for Africa. Africa has to grow, 6, 7, 8 percent – not 3 percent. We cannot achieve high growth unless countries facing heavy debt service burdens have some breathing space.
For some countries, debt service suspension – providing temporary breathing space – may be sufficient. They can recover. But for some, it is not going to be sufficient.
That’s why David and I have been pressing the point of case-by-case debt restructuring. We will have to do it earlier rather than later if we want to have the positive impact necessary.
And of course, last but not least, we will continue to provide financial support on a scale compatible with the incredible shock of this crisis.
I want to reiterate here that, as we help countries respond to the crisis, it will be crucial for them to support the most vulnerable people. The Secretary General spoke about the fate of women. We also know that the low-skilled are going to be affected, that the young generation is going to be affected dramatically. Countries should prioritize their needs accordingly.
Conclusion: Building a Resilient Future
Let me finish by saying that our success in working together will be judged by how effective we are in this time of crisis. But it will also be judged by how effective we are in building resilience to shocks to come.
I was so pleased that the Secretary General and my good friend David Beasley recognized the looming climate crisis and how critical it is that we take the simplest lesson from what has happened from COVID-19: prevention is better than cure.
We have to work together at every level – from communities to countries to the global level – to make sure that we invest in resilient people. People that are healthy, educated, and with the skills for the economy of tomorrow, not the economy of yesterday. That we invest in a resilient planet – that we have our oceans and our land and our forests able to sustain the aspirations of people and actually sustain a healthy agricultural system that can feed the world’s people.
And also retain resilient finance. Yes, today, we lean forward, we use resources, and low-interest rates allow us to do more. But ultimately, what we borrow will have to be paid back in the future. Therefore, we do need to think of financial sustainability on par with the actions we take for people and the planet.
And again, I want to recognize that the World Food Program is doing us all a huge favor by pressing us to come together, because only together can we deal with the challenges of today, and those that are going to come in the future.
Thank you.