Transcript of April 2022 MD Kristalina Georgieva Press Briefing on GPA

April 20, 2022


Kristalina Georgieva, Managing Director, IMF

Gerry Rice, Director of Communications, IMF

Mr. Rice: Welcome to this press conference on behalf of the International Monetary Fund. I am Gerry Rice of the Communication Department. This is, of course, the opening of our Spring Meetings, so warm welcome everyone. I think you have received in advance the Global Policy Agenda, so I hope you have been able to take a look at that. We have with us the Managing Director of the IMF, Kristalina Georgieva, and I am going to ask her to make some opening remarks, after which we will turn immediately to your questions. If you can keep them as brief as possible, we will try and get through as many as possible. Thanks again for joining us. Kristalina, over to you.

Ms. Georgieva: Welcome to our Spring Meetings. Many thanks for joining us. I want to start by recognizing we meet at a consequential moment for the world. We are facing a crisis upon a crisis, a war on top of a pandemic; and it is like being hit by another storm before we have recovered from the last one.

What is the result? A massive setback for the global economy. Yesterday we reduced our global growth forecast to 3.6 percent for both this year and 2023. Downgrades apply to 143 countries. This is caused largely by Russia’s invasion of Ukraine and the shockwaves it has sent around the world.

First and foremost, of course, it is so heartbreaking to witness the dreadful human suffering of the Ukrainian people, but there are other significant consequences going fast and far.

Accelerated inflation; it has become a clear and present danger for many countries. Rising food and fuel prices are straining the budgets of ordinary families to a breaking point. Financial tightening because of the need to counter inflation, hitting countries with high debt the hardest. Frequent wide‑ranging lockdowns in China, causing further bottlenecks in global supply chains.

These are additional dark clouds weighing on the global economy, and there is one more hanging over our heads: the risk of geopolitical fragmentation, which could jeopardize the development gains of the last 75 years, and also leave us unable to deal with the current crisis and to address other urgent global challenges such as climate change.

How can we weather these severe storms? We have presented our Global Policy Agenda. We are analyzing the repercussions of the crisis we are facing, and we also offer a way forward in terms of an immediate response and longer‑term efforts to boost resilience to shocks to still come.

Our immediate hope must be for the war to end. That would have the single most positive effect on the global recovery right now. In the meanwhile, we must do everything we can to help Ukraine and other heavily affected countries.

We have already provided $1.4 billion dollars in emergency financing to Ukraine. We created a special account through which others can securely contribute. Just a few days ago, President Zelensky and I discussed the massive reconstruction efforts that will be needed, as well as the immediate financing gap for the functioning of the economy we have to fill.

We are also working to help impacted neighbors like Moldova, which is so generously hosting a large number of refugees.

At the same time, COVID has not disappeared. We must continue to fight it. With our partners, we have recently proposed a comprehensive toolkit that includes vaccines, testing, and anti‑viral treatments. It can be deployed everywhere at the modest cost of $15 billion this year, $10 billion in subsequent years.

There are three pressing priorities stemming from inflation. First, it requires decisive actions by central banks. They must keep their finger on the pulse of the economy and adjust policy as needed. And as they tighten, major central banks should communicate clearly, mindful of spillover risks to vulnerable emerging, and developing economies.

Second, high and rising food prices are particularly concerning, especially in poor countries where there is a growing risk of a food crisis. We need international action, and we need it now. Yesterday with Secretary Yellen and other Finance Ministers and partners, we made important progress toward global action to provide immediate relief.

Third, fighting inflation through monetary policy tightening raises the cost of servicing debt. For low‑income countries, its burden has reached 50 percent of GDP, and that places 60 percent of countries at or near debt distress. To address debt, countries need domestic policies that can help bring their budgets back on track, while providing targeted assistance to the most vulnerable. And they can do that with more equitable tax policies.

At the same time, international support is essential, and here we have said that the G20 Common Framework for Debt Treatment must be improved with clear procedures and timelines for debtors and creditors. It should also be expanded to other highly indebted vulnerable countries.

These immediate responses will lessen the impact of today’s double crisis; but to be ready for tomorrow’s challenges, we need reforms to build resilience.

For people, by acting to remedy education losses and reskill the labor force for the digital economy, to reduce corrosive inequality.

For climate, by taking a comprehensive approach that includes carbon pricing, green public investment, and measures to create new opportunities for those adversely affected. And these are actions that can also bolster energy security.

For the economy, by implementing far‑reaching structural reforms to secure the foundation for sustainable growth and job creation.

We are stepping up to help our members on all these fronts with policy advice and capacity development, and with our financial capacity. We have deployed around $300 billion. We have $700 billion more available to deploy.

On top of that is the $650 billion SDR allocation last summer. They helped our members respond to the crisis they face now, and they will do even more over the long term as they are channeled into our new Resilience and Sustainability Trust, approved by our Executive Board just last week.

That brings me back to this week. Our members convening here, including many in person for the first time since the pandemic. Despite the storms overhead, we will work together to bring all safely towards the shore.

I would finish with one of my favorite poets, Maya Angelou, who reminded us that “every storm runs out of rain.” And this one will, too. Thank you.

Mr. Rice: Thank you so much, Kristalina. Let us turn straight to your questions again. If we can keep them brief, we will get in as many as we can. Please raise your hands on screen.

Question: Thank you for taking my question. Madam Managing Director, the IMF global outlook released yesterday seems to paint a really bleak picture for Sub‑Saharan Africa. Inflation is rising; food prices are rising, and we also have COVID‑19. We are still recovering from it. Is all hope lost for Africa, and if not, what appropriate international action is needed right now, specifically right now, for Africa to recover? Thank you.

Ms. Georgieva: Thank you for your question, and, indeed, we have seen Africa pushed back—because of the COVID‑induced crisis—in its development. And as it was recovering, it is now hit by the consequences of the War in Ukraine.

These consequences are quite severe. Growth projections revised down for many countries. Out of 54 countries in the African Continent—let me take the Continent as a unit—we know 12 are oil exporters. The rest are all importers. All hit by high energy prices. But the most troubling impact is of high food prices and food insecurity.

To put it very simply, a war in Europe, in Ukraine, translates into hunger in Africa.

What must be done and where we are concentrated on, three avenues of action:

One, protect countries and people from the risk of food crisis, and there we know that bringing the international community together to provide financing, also to guarantee export of food, and to build up agricultural productivity in Africa, including measures right now to get farmers to produce more, this is absolutely paramount, and I am so pleased that we have agreed on an action plan for that.

Two, the problem of debt. In Sub‑Saharan Africa, 20 countries are in debt distress or very close to debt distress. With interest rates going up, this burden of debt is intolerable. So working to get debt restructuring early, this is a priority for us, and this is why I talked about the Common Framework.

Three, engage with Africa on the longer‑term challenges; top of mind, climate change. We have seen the pictures in South Africa. We have to recognize that Africa contributes very little to the problem of climate change but is extremely vulnerable. Massive effort, including supported by our new Resilience and Sustainability Trust, is needed for Africa.

Mr. Rice: Thank you very much, Kristalina.

Question: Thank you, Gerry, for taking my question, and thank you, Managing Director. I have two questions. The first about the geopolitical fragmentation that you mentioned there is a risk, and the WEO report said that the fragmentation of the world economy could be permanent. I wonder whether you could share some thoughts on how likely is such permanent fragmentation going to happen, and what is the IMF’s suggestions for policymakers?

Secondly, about the Chinese economy, could you share some insights on China’s newly released Q1 GDP data, and how do you see China’s growth going forward, especially in the remainder of the year? Thank you.

Mr. Rice: Kristalina, I know we are short of time. We have another question on the fragmentation.

Question: Thank you so much. I really appreciate it. Good morning. The IMF including to you, Managing Director, issued numerous warnings yesterday about risks and dangers of the global economy fragmentation due to the current geopolitical tensions; and my question is, what is the IMF doing specifically to prevent this fracturing of the international economy considering the fact it is taking place mainly as a result of the West using unprecedented instruments like seizing Russia’s central bank’s assets, squeezing Russia out of the global banking system, and deploying other similar measures amounting essentially to economic warfare? Thank you so much.

Ms. Georgieva: Thank you both for your questions. We first look back, and what we see is the tremendous benefits of cooperation in an integrated global economy. Since 1990, global GDP tripled, and the benefits were primarily for emerging markets and developing economies. They have increased by 4.5 times.

We know that poverty shrunk tremendously, from 2 billion in 1990, to 650 million today—650 million too many. But if we want to protect the gains of cooperation, we have to make sure that these gains are visible and also our shortcomings in globalization from the past are corrected.

We know that not everybody benefited, and therefore looking forward, we have an obligation to identify what went wrong and then fix it. And, of course, you know what went wrong. Inequality went up, and there have been winners and losers within countries and across countries.

Secondly, we know that the world is changing. It is a multi‑polar world. This is not new. It has been happening over time. The questioning is, will this multi‑polar world evolve into blocs working closely and separate from each other, or we would retain the highways that connect countries for the benefits of their people? And that takes us to how we see the pathway to the future.

Ironically, a more fragmented world actually requires more cooperation to prevent massive risks from materializing. But it is better to evolve with built‑up opportunities to make lives of people everywhere more prosperous. That takes me to answering concretely your question, what is the IMF doing?

Well, first, we provide objective analysis of the benefits of cooperation and the risks of fragmentation for everybody to see. We speak truth to power.

Second, we bring countries together. We are right now together debating difficult policy choices.

Most importantly, third, we show, we demonstrate the power of cooperation. We just had the Resilience and Sustainability Trust approved. What it means is taking reserves from countries that got it, do not need it—and channeling those to countries that need it.

This is the best way, as you know from the saying, proof of the pudding is in the eating; and we would relentlessly pursue this pathway of collaboration.

Mr. Rice: Thank you, Kristalina. There was also a question on China.

Ms. Georgieva: I am sorry. I got so taken by the pathway to a better future that I did not reflect on your question on China.

Where is the Chinese economy? Growth remains in positive territory, of course, but we have downgraded it to 4.4 percent mostly because of the interruptions caused by lockdowns to prevent the spread of COVID.

We see China capable of boosting the economy because it has ample policy space, both monetary policy—and we have seen in the last days the People’s Bank of China taking action to ease conditions for access to credit.

And it also has a space in terms of fiscal policy. There our recommendation is: use this space to support the most vulnerable people and mostly to boost consumption, because what we see in China is that consumption is falling short. It is not recovering as strongly as necessary. So rather than moving money into public investments, move it into the pockets of people so there is more dynamism coming from a consumption boom.

Mr. Rice: Thanks so much, Kristalina.

Question: Thank you so much for taking my question. Ukraine’s Finance Minister recently appealed for immediate aid to cover the country’s widening fiscal deficit, which they believe could swell as much as $7 billion a month in May. I am curious to what extent the Fund is prepared to provide additional financial support to Ukraine. Thank you.

Ms. Georgieva: Thank you very much for your question. Let me first express my admiration for the work of the Ukrainian economic team, Ministry of Finance, Central Bank, to retain macroeconomic and financial stability in a country under tremendous distress.

We have been engaged very closely with the Ministry of Finance on the estimates they have provided of what would be necessary to retain the functioning of the economy over the next three months. And they came up with the number of $5 billion a month, which—there is uncertainty around this number—but which we do not think is out of the likely needs of the country.

The first priority is to make sure that there is support to fill this financing gap in Ukraine over the next three months. Let me stress the $5 billion is to keep the economy functioning. It is not to meet the reconstruction needs of Ukraine that are going to be huge.

What we do is we work with our partners to ensure that we mobilize through different channels that kind of support, and that we work further on detailing the exact needs and how best these needs can be met. As I mentioned in the beginning, we have created a Fund‑administered account. We already had one contribution to this account, and it is open to others to contribute.

Looking forward, we are already discussing with Ukraine a follow‑up program. Of course, now we have very high uncertainty, but it should not prevent us from starting the work on a package of support for Ukraine to come.

Question: If I could just quickly follow‑up, is then the target range for this $5 billion a month, is that a kind of firm commitment, a starting point, or do you expect that number potentially to shift?

Ms. Georgieva: We are going to discuss this with the partners of Ukraine. At this point it is important to get grant financing for Ukraine, for an understandable reason. A big part of the economy is not functioning.

We are projecting around 35 percent shrinkage of the Ukrainian economy this year, and therefore filling this financing gap is best done by relying on grant financing, and that is what we want to see to mobilize funds for Ukraine.

Looking into Fund support, it is, in our view, a program that we can start structuring for the future, but not a program that is wise to get to our Board while the hostilities are still ongoing. Because it is unfair to expect from Ukrainian authorities to develop and implement far‑ranging package of reforms at this time. They do the right thing. They focus on what matters the most at this moment, and it is keep the economy functioning, and they are doing a really good job at that.

Mr. Rice: Thanks, Kristalina. A clutch of questions on the Middle East that I am going to take rapid fire. The first one is on Lebanon. It is online: Why is the IMF helping Lebanon despite their announcement they are bankrupt; corruption prevails? Why did the Fund sign a staff‑level agreement without asking for reforms?

Then I am going to turn to Egypt and Tunisia. Let us take those three, please.

Question: Good morning. Thank you for taking my question. The IMF announces that Egypt has submitted a request for a new program to support the Egyptian economic performance. This followed the news that it might include financial support. What is the size of the financial package that was requested, and when do we expect an announcement? I would also like to get your assessment for Egypt’s economy now and in the near future. Thank you.

Mr. Rice: Thank you. So that is Lebanon. Let us take Tunisia.

Question: Thank you for taking my question. First question is about your comments, Managing Director, about the [inaudible] debt restructuring and [inaudible] concern that the IMF will pressure Tunisia to [restructure] its debt. Could you please clarify your comments? And what is the status of the discussion with the IMF on a new program [inaudible]?

Ms. Georgieva: These are questions that on [their] own demonstrate how difficult the environment has become for so many countries, some of them already in crisis, and now this crisis deepening, and some being pushed in a more difficult place.

Lebanon. We have been engaged with Lebanon for a long time. We very much appreciate the pressure from civil society in Lebanon for a program that is beneficial to the Lebanese people, and this is what we want.

Why we are engaged? Because the situation is so dire that for the population of the country, a change of direction and reforms that can stabilize the economy are paramount.

In that context, we did reach a staff‑level agreement with very strong preconditions for the program to go to our Board of Directors, and our team is engaged to make sure that these preconditions are met. It is tough, but we cannot let the country continue to slip to the edge with so much pain imposed on the Lebanese people.

When it comes down to Egypt, we had a very successful experience with our previous program. We now see conditions for the Egyptian economy worsening. You know that the country suffered a major setback because of fuel and food prices, its dependence on imports for food from Russia and Ukraine, and the fact that for some time there was a sucking of reserves to try to protect the currency.

We now see the country taking very seriously the need to stabilize financially and also to continue with reforms, and on that basis, we are engaged to build a program that would be very much sensitized on the fact that a great number of people in Egypt today are vulnerable. Therefore, we have to make sure that vital social protection that has been tuned to reach these vulnerable people continues to be provided.

On Tunisia, we have a very good engagement with the country. In fact, we have held technical discussions, and now we are continuing them this week with the Tunisian delegation. These talks are progressing well.

It is a country‑driven program, so we need to understand all parameters of this program, and we will reach a conclusion together with the Tunisian authorities, including on the issue of debt and how it should be handled, I hope in short time.

Mr. Rice: Thank you, Kristalina. Turning to other parts of the world, I see many colleagues from Argentina with their hands raised. I am going to just take one question. Please excuse me. And then another part of the world we have not touched on, India.

Question: Good morning. About the Argentine program, what is the biggest challenge, Ms. Georgieva, you think the Argentine program faces to succeed—the rising inflation that has worsened because of the War in Ukraine, or the political divisions in Argentina—and how do you expect the program to be recalibrated in the first review?

Ms. Georgieva: We came together with a common objective, and it is to have a program that can be implemented successfully and help the Argentine people.

So the challenge of the days ahead: implementation. In that regard, of course, implementation has to be calibrated to reflect changes in the global economy. For Argentina, some of these changes are actually positive because it is a commodity exporter.

The big risk is inflation, that as you know, is being pushed up by exogenous factors as well. And therefore a great deal of attention will be paid to how to bring inflation to a point that people in Argentina can be confident about their savings in their currency.

You asked me about the review. It has been accelerated, so very soon you will be asking our team and the Argentine authorities about the results of the review as it progresses.

Mr. Rice: Thanks, Kristalina. Do you want to come in with your question on India?

Question: Thank you, Gerry. Good morning, Madam Managing Director. On Monday you had a meeting with India’s Finance Minister, Nirmala Sitharaman. In your interview yesterday, you said, I welcome India’s success in rolling out their vaccination program domestically and abroad. I would like to ask you what role India can play in improving the global economic situation so as to safeguard the interests of the most vulnerable. Thank you.

Ms. Georgieva: Thank you very much for this question. India is one of the economies that are growing at a high rate. Even with the small downgrade, growth is projected for this year to be 8.2 percent. Healthy for India, but also positive in a world where growth slowdown is creating a major problem.

India already plays a very important international role. By exporting vaccines during the pandemic, it has delivered a global public good. India is also committed to lead in renewable energy with the International Solar Alliance, another area where the world needs more determination, more progress. And it is a country that is on the frontline of digital currencies, especially central bank digital currency and how it handles a reduction of risk from crypto assets for the Indian people and businesses.

And I would finish by saying: next year India is going to be the Chair of the G20, and I very much look forward to working with India on the many key global cooperation issues, including the 16th General Review of Quotas that should be finalized by the end of next year.

Mr. Rice: Reuters, David.

Question: Thanks, Gerry. Later today the G20 Finance Ministers and Central Bank Governors are going to be meeting. You have raised concerns about fragmentation of the economy. There is a lot of countries that want to kick Russia out of this forum. Some of the Ministers say that they are going to get up and walk out when the Russian Finance Minister speaks. I am just wondering sort of how do you keep this forum together? It has been very important to debt relief and a number of other issues, climate change. Is there a concern that this forum, the G20, will sort of fade in importance or unravel? How do you avoid that?

Ms. Georgieva: Stay focused on the big issues.

Mr. Rice: Kristalina, if I may, I think we have got a couple of other questions on G20.

Question: Good morning, and thank you for taking my question. Yes, actually it is in the same kind of question of David, but I was wondering if you can elaborate on is the G20 still relevant? We know that some Ministers will not attend some sessions, so the question is what can we expect from the G20 meeting in wartime with Russia?

Mr. Rice: Richard, why don’t you come in as well on this one.

Question: Thank you very much, Gerry, and good morning, Managing Director. Similar question to David really about the G20. It would appear to me a flash point in the future of multilateralism. Is it appropriate that some of the G7 members do not attend this meeting, and are you concerned that this group may not be able to function at a moment that is, as you say, a watershed for the future of multilateralism?

Mr. Rice: Kristalina, I am going to be very unfair and throw one more in, and then we are done, but it is along similar lines: How can the international system be reformed to provide more long‑term investment for infrastructure and climate change investment, and do state economies do better than market economies. So again, broad question about the international systems. Sorry about all that.

Ms. Georgieva: OK. Well, let me give it a shot. Of course, we have a very challenging time, a great deal of uncertainty, and first and foremost, we have to focus on these challenges for the benefit of the billions of people that rely on sound economic policy for their families, for their livelihoods. I have no doubt that there would be substantive discussion on these matters.

The G20 is going to be meeting, as you said, very shortly. Ministers are here. Central Bank Governors are here. And they are quite intensively meeting bilaterally in regional formats, so that tells you that the need for cooperation is so strong. If you have any doubt, just walk the corridors here, and you would see how the IMF, the World Bank buildings are buzzing with attendance.

It is a difficult moment. There are clearly very, very unsettling facts we have to deal with. I can say honestly I never thought that I would live through another war in Europe on the scale this one takes place, but we also recognize how interdependent we are. And just make the list of questions no country can solve on its own, and it is so obvious that cooperation must and will continue.

You will have a chance to talk to Sri Mulyani. She is much better equipped than me to discuss G20 matters, as the one that is authorized to do so. But as an institution that has 190 members, I can vouch for the fact that it is more difficult when there are tensions, but it is not impossible. And important decisions are taken.

I personally chaired a meeting on the Resilience and Sustainability Trust, very rewarding to see how the whole world, emerging markets, advanced economies, poor countries, came together for an important new pillar in the instruments of the IMF.

I am, of course, also with a very simple decision on what should be done and how to do it. Whenever in doubt, I take the picture of my grandchildren; I look at them, and the answer comes straight from there. We have an obligation to create and keep a world that is good for our children.

I am going to move to the infrastructure and climate change question. We do need massive investments to transform our economies to a low carbon and climate‑resilient future. These investments ought to come from public pockets and also from private sources.

There is simply no way public money on its own to resolve this problem. Neither we would see private money on scale going in the right direction, unless the public authorities put in place the incentives and the mechanisms for this to happen.

Number one incentive on our list, carbon price. Without a carbon price that is projected to go up in the future predictably, there would be no incentive sufficient to move money in the right direction.

And public money also has a huge responsibility to remove barriers for private investments—by reducing risks when risk is too high. There is space for everybody. What matters in the end is are we bringing emissions down? Are we building resilience up?

Mr. Rice: Thank you so much, Kristalina. Sorry, everyone, we have run a little bit over. I am sorry if we did not get to all of your questions. We will try to take them tomorrow at the IMFC press conference. Thanks everybody. Stay well. Stay safe.

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