IMF Managing Director Kristalina Georgieva Urges Continued Action to Address Two-Track Recovery

IMF News, July 10, 2021

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Recovery continues, broadly in line with the IMF’s April projection of "6 percent global growth this year."
The world is facing a "two-track recovery": accelerated growth in major advanced economies and some emerging market countries, while many other countries—particularly the poorest without access to vaccines and with surging infection rates—experience suppressed growth.
A "dangerous wave of a highly transmissible variant" remains the fundamental risk.

Vaccination goals:
- "cover at least 40 percent of the population in every country by the end of 2021"
- "60 percent by the middle of 2022"
Institutional response:
- The World Bank, WHO, WTO and IMF, in close collaboration with ACT-A, have formed a task force described as a "war room" to help achieve these goals.
Estimated benefits:
- "By providing faster access to vaccines to high-risk populations, more than half a million lives could be saved this year."
- "A normal return to activity everywhere could add $9 trillion to the global economy through 2025."
- Cost comparison: "the $50 billion cost of this pandemic plan pales by comparison."

Fiscal policy:
- "Fiscal policy should provide well-designed support, tailored to country circumstances, to protect the most vulnerable and minimize scarring."
- As economies exit the crisis, policies should "facilitate stronger, more sustainable, and more inclusive growth."
Monetary policy:
- "Monetary policy should remain accommodative, as inflationary pressures are likely to be temporary."
- Caveat: "But should a pick-up in inflation turn out to be more permanent, some large economies further ahead in the recovery may need to tighten sooner than expected."
- Central banks must "communicate policy intentions clearly to avoid triggering adverse spillovers."
IMF readiness:
- "Should tighter financial market conditions materialize sooner than anticipated, the Fund is prepared to assist its members to ensure the recovery remains on track."

New SDR allocation:
- The G20 and membership support "a new SDR (Special Drawing Right) allocation of $650 billion—the largest in IMF history."
- Expected effects: increase countries’ reserves, "create additional space for vaccine financing, and boost confidence in the recovery."
- The IMF will "move quickly to explore options for economically stronger members to voluntarily use their SDRs to help poor and vulnerable countries."
Poverty Reduction and Growth Trust (PRGT):
- Scaling up the PRGT is described as a "tried-and-tested option" to provide "zero-interest financial support to low-income countries through the medium term."
Resilience and Sustainability Trust:
- The IMF is "exploring the possibility of creating a new Resilience and Sustainability Trust for vulnerable members to build forward better, including through financing for greener, more resilient and sustainable growth over the medium term."

The IMF is "working closely with the World Bank and other partners to ensure effective implementation of the Common Framework."
Recognition of creditor coordination:
- Commendation for "members of Chad’s Creditor Committee" for work enabling "leverage for debt relief from private creditors and the assurances required for much-needed financing from the IMF and development partners."
- "Welcome[s] the G20 call for the timely formation of the Creditor Committee for Ethiopia to facilitate progress with review of the Fund-supported program there."

Climate:
- Praise for G20 focus on "climate risks and role of carbon pricing mechanisms."
- Intention to follow up on a proposed "international carbon price floor" at the G20 Conference on Climate.
Pandemic preparedness:
- G20 "welcomed the Report of the High Level Independent Panel on Financing Global Commons for Pandemic Preparedness and Response" and committed to work with international financial institutions and partners to develop "proposals for sustainable financing to strengthen future pandemic preparedness and response."

Appreciation to the Government of Italy, Minister Daniele Franco, and Governor Ignazio Visco for chairing "the first hybrid G20 meeting since the pandemic."
Thanks to the city and people of Venice for "their warm and gracious hospitality."

International Monetary Fund — July 10, 2021

Pr21211 Md G20 Statement Italian
- Pr21211 Md G20 Statement Italian (Markdown version)
- Pr21211 Md G20 Statement Italian (PDF)