Transcript of April 2022 MD Kristalina Georgieva Press Briefing on GPA
IMF News, April 20, 2022
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- Published: April 20, 2022
Global outlook and near‑term findings
- Global growth forecast reduced to 3.6 percent for both this year and 2023.
- Downgrades apply to 143 countries.
- Main causes: Russia’s invasion of Ukraine and resulting global shockwaves, accelerated inflation, rising food and fuel prices, financial tightening, and frequent wide‑ranging lockdowns in China.
- Additional highlighted risk: geopolitical fragmentation threatening development gains of the last 75 years.
Immediate impacts on people and economies
- Accelerated inflation described as a "clear and present danger" for many countries.
- Rising food and fuel prices straining household budgets.
- Monetary tightening to fight inflation increases cost of servicing debt; for low‑income countries:
- Debt burden has reached 50 percent of GDP.
- 60 percent of countries are at or near debt distress.
- Supply chain bottlenecks linked to lockdowns in China.
Global Policy Agenda — immediate response priorities
- Immediate hope: an end to the war in Ukraine would have the single most positive effect on global recovery.
- IMF immediate actions and support highlighted:
- Provided $1.4 billion dollars in emergency financing to Ukraine.
- Created a Fund‑administered special account to which others can contribute.
- Working to help impacted neighbors such as Moldova.
- COVID response toolkit proposed with partners:
- Costed at $15 billion this year, $10 billion in subsequent years.
- Includes vaccines, testing, and anti‑viral treatments.
- Three pressing priorities to address inflation:
- Central banks must act decisively and communicate clearly, mindful of spillovers to vulnerable economies.
- International action needed urgently on high and rising food prices to prevent a food crisis.
- Address rising debt costs with domestic policies and more equitable tax policies; improve the G20 Common Framework for Debt Treatment with clear procedures and timelines and expand it to other highly indebted vulnerable countries.
Medium‑ and longer‑term resilience reforms
- For people: remedy education losses and reskill the labor force for the digital economy to reduce inequality.
- For climate: a comprehensive approach including carbon pricing, green public investment, and measures to create opportunities for those adversely affected; such measures also bolster energy security.
- For the economy: implement far‑reaching structural reforms to secure sustainable growth and job creation.
- IMF support capacity stated:
- Deployed around $300 billion.
- $700 billion more available to deploy.
- $650 billion SDR allocation last summer; resources to be channeled into the new Resilience and Sustainability Trust approved by the Executive Board.
Regional focus and country‑level notes
- Sub‑Saharan Africa:
- Continent has 54 countries; 12 are oil exporters, the remainder are importers.
- High food prices are especially concerning; "a war in Europe, in Ukraine, translates into hunger in Africa."
- In Sub‑Saharan Africa, 20 countries are in debt distress or very close to debt distress.
- Three avenues of action emphasized: protect against food crisis, accelerate debt restructuring, and engage on long‑term challenges including climate change with support from the Resilience and Sustainability Trust.
- Ukraine:
- Ukrainian authorities estimated potential fiscal needs; press briefing referenced an appeal that the fiscal deficit could swell as much as $7 billion a month in May.
- IMF engagement: Ukrainian estimate for near‑term financing needs of $5 billion a month to keep the economy functioning over the next three months (not to cover reconstruction).
- IMF view: best to mobilize grant financing for Ukraine given projected economic shrinkage.
- IMF projection: around 35 percent shrinkage of the Ukrainian economy this year.
- IMF working with partners to mobilize support and structuring a follow‑up program for the future once uncertainty lessens.
- China:
- Q1 growth downgraded to 4.4 percent, mainly due to COVID‑related lockdown interruptions.
- IMF assessment: China has ample policy space—monetary and fiscal—to boost the economy.
- Policy recommendation: use fiscal space to support the most vulnerable and boost consumption rather than focusing primarily on public investment.
- India:
- Growth projected at 8.2 percent for this year (despite a small downgrade).
- India’s international roles noted: vaccine exports during the pandemic, leadership in renewable energy via the International Solar Alliance, and engagement on central bank digital currency and crypto risk reduction.
- India to chair G20 next year; IMF looks forward to cooperation including the 16th General Review of Quotas.
- Lebanon, Egypt, Tunisia:
- Lebanon: IMF engagement driven by dire situation and need for reforms to stabilize the economy; a staff‑level agreement reached with strong preconditions before a program goes to the Board.
- Egypt: previous program seen as successful; current conditions have worsened due to fuel and food price shocks and reserve pressures; IMF engagement aims for a program sensitive to vulnerability and preserving social protection.
- Tunisia: technical discussions progressing; program is country‑driven and debt handling to be agreed with Tunisian authorities.
- Argentina:
- IMF and Argentina share a common objective: a successful, implementable program to help the Argentine people.
- Key near‑term challenge: implementation and managing inflation pressures exacerbated by the war in Ukraine.
- Review of the program has been accelerated.
Risks to multilateral forums and fragmentation
- IMF view: cooperation has delivered large benefits since 1990; global GDP tripled and emerging markets and developing economies increased by 4.5 times; poverty fell from 2 billion in 1990 to 650 million today.
- Risk of fragmentation discussed:
- Question whether a multi‑polar world will evolve into separate blocs or retain interconnected "highways" for mutual benefit.
- IMF actions to counter fragmentation:
- Provide objective analysis of benefits of cooperation and risks of fragmentation.
- Convene and bring countries together for difficult policy choices.
- Demonstrate cooperation in practice (example: Resilience and Sustainability Trust channeling reserves from countries that do not need them to those that do).
- G20 relevance:
- IMF emphasizes staying focused on big issues; Ministers and Central Bank Governors continue intensive meetings despite tensions.
- Resilience and Sustainability Trust cited as an example of collective decisionmaking.
Policy instruments and reform priorities highlighted
- Monetary policy: decisive action by central banks with clear communication on spillover risks.
- Fiscal policy: targeted fiscal support to vulnerable populations; prioritize boosting consumption where appropriate.
- Debt treatment: improve G20 Common Framework with clear procedures and timelines; expand coverage to other highly indebted vulnerable countries.
- Climate finance and investment:
- Need for massive investments from public and private sources.
- Carbon pricing identified as a central incentive to direct private investment toward low‑carbon projects.
- Public funds should reduce barriers and risks to mobilize private finance.
Closing observations
- Managing Director emphasized the immediacy of war‑related impacts, the need for urgent international action on food, debt, and financing for affected countries, and the dual task of addressing near‑term needs while building longer‑term resilience.
- Closing sentiment: "every storm runs out of rain," expressing confidence that the crisis will end.
Transcript of April 2022 MD Kristalina Georgieva Press Briefing on GPA (April 20, 2022), IMF Communications Department