Transcript of the IMFC Press Briefing

IMF News, October 14, 2021

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Bibliographic details

• Published: October 14, 2021

Overview

• Date: October 14, 2021.
• Speakers: Magdalena Andersson (IMFC Chair), Kristalina Georgieva (IMF Managing Director), Gerard Rice (IMF Communications Director).
• Context: Press briefing following the International Monetary and Financial Committee (IMFC) meeting at the IMF and World Bank Annual Meeting.

Economic recovery and divergence

• Findings:
  • The economic recovery continues while divergence between countries is increasing.
  • Two primary explanations for divergence: differences in access to vaccines and differences in policy space and support.
• Policy guidance:
  • Carefully calibrate domestic policies to local circumstances.
  • Once recovery is underway, policymakers should shift focus from crisis response to promoting growth and preserving long‑term fiscal sustainability.

Vaccination goals and international cooperation

• Agreed targets:
  • Vaccinate at least 40 percent of the population in all countries by the end of 2021.
  • Vaccinate 70 percent by mid‑2022.
• Recommendations:
  • Strong international cooperation and immediate action to achieve universal vaccination.
  • Encourage the Multilateral Leaders Task Force to accelerate access to vaccines and facilitate coordination among international partners, including mobilizing critical financing.

Special Drawing Rights (SDRs) and IMF financing

• Key figures:
  • Decision to allocate $650 billion in Special Drawing Rights to IMF members.
• Findings:
  • Agreed to channel these SDRs on a voluntary basis to benefit low and vulnerable middle‑income countries.
  • Some members have already announced new contributions to the Poverty Reduction and Growth Trust (PRGT).
• Policy recommendations:
  • Countries with strong external positions are called on to voluntarily channel SDRs to those most in need.
  • Encourage further contributions to the PRGT, including contributions in the form of SDRs.
  • Establish a Resilience and Sustainability Trust (RST), in close collaboration with the World Bank, to provide financing to vulnerable members to reduce risks related to climate change and pandemics.

Climate action and IMF work program

• Findings:
  • Climate change is increasingly urgent, with stronger emphasis in the Communiqué following the IPCC report.
  • The IMF membership has endorsed a climate strategy that integrates climate into IMF work.
• Operational approach:
  • Integrate climate issues in Article IV Consultations:
  • For large emitters: focus on mitigation.
  • For highly vulnerable countries: focus on adaptation.
  • For countries facing difficult transitions: support for structural transition away from carbon‑intensive sectors.
  • Build IMF capacity to analyze climate‑related risks and incorporate findings into policy advice and lending.
  • The RST is intended to support transitions to low‑carbon, climate‑resilient, smart, inclusive economies.

Supply chains, trade, and inflation

• Findings:
  • Supply chain disruptions reflect a restart of the global economy; disruptions arise when demand rebounds faster than supply can catch up.
  • Global trade picking up is a positive sign for growth but contributes to bottlenecks.
• Inflation assessment:
  • The prevailing view among IMFC participants is that much of the current inflation is transitory.
  • Central banks should "look through" transitory inflation but remain vigilant for signs of deanchored inflation expectations.
  • Risks that could exacerbate price pressures include climate shocks and persistent bottlenecks.
• Policy implications:
  • Address divergence (including through vaccination and support for vulnerable countries) to ease bottlenecks.
  • Central banks should monitor inflation expectations and act if they become deanchored.

Energy prices and policy implications

• Findings:
  • Recovery has contributed to a rapid increase in demand for energy, pushing energy prices up.
• Policy recommendations:
  • Avoid blanket subsidy programs; target support to poorer households most affected by price increases.
  • Accelerate investments, public and private, in renewable energy and energy efficiency to prevent the green transition from becoming a source of future price pressure.
  • Ensure the green transition creates jobs and growth and is implemented as a just transition that protects vulnerable citizens.

Country focus — Egypt

• Findings and projections:
  • Egypt managed the pandemic and its economic impact well.
  • Reported growth in 2020‑2021: 3.3 percent.
  • Projected growth for 2021‑2022: 5.2 percent.
  • Egypt has a high level of public debt and significant gross financing needs.
• Policy recommendations:
  • Pursue medium‑term fiscal consolidation as the economy improves to strengthen the economic foundation.
  • Continue structural and governance reforms under the Stand‑by Arrangement to support sound policy framework.

Sovereign debt and transparency

• Findings:
  • The IMFC welcomed G20 efforts to step up implementation of the Common Framework.
  • The IMFC supports the IMF's agenda to promote debt sustainability, transparency, and restructuring where needed.

Governance and institutional matters

• Findings:
  • The IMFC welcomed the IMF Executive Board's statement on the review of the investigation of the World Bank's Doing Business 2018 Report.
  • The IMF Board conducted a thorough review and expressed unanimous and full support for the Managing Director's conduct in office.

Source: Transcript of the IMFC Press Briefing, October 14, 2021.

References

• Arab Republic of Egypt and the IMF
• Brazil and the IMF
• IMF Policy Advice -- A Factsheet
• Transcripts
• PRESS CENTER
• https://www.imf.org/en/home