IMF Managing Director Kristalina Georgieva Urges G20 Leadership to Address ‘Exceptionally Uncertain’ Global Outlook

IMF News, July 16, 2022

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Canonical URL: IMF Managing Director Kristalina Georgieva Urges G20 Leadership to Address ‘Exceptionally Uncertain’ Global Outlook

Press Release No. 22/261; July 16, 2022; Bali, Indonesia.
Speaker: International Monetary Fund Managing Director Kristalina Georgieva at the hybrid meeting of the G20 Finance Ministers and Central Bank Governors.
Core assessment: “The outlook has darkened significantly, and uncertainty is exceptionally high. Downside risks about which the IMF had previously warned have now materialized.”
Drivers of the worsened outlook:
- The war in Ukraine has intensified, exerting added pressures on commodity and food prices.
- Global financial conditions are tightening more than previously anticipated.
- Continuing pandemic-related disruptions and renewed bottlenecks in global supply chains are weighing on economic activity.
Near-term projection action: “As a result, later this month we will project a further downgrade to global growth for both 2022 and 2023 in our World Economic Outlook Update.”

Inflation risk: If inflation is more persistent, downside risks could deepen, “requiring even stronger policy interventions which could potentially impact growth and exacerbate spillovers particularly to emerging and developing countries.”
Debt stress:
- “More than 30 percent of emerging and developing countries are at or near debt distress.”
- “For low-income countries that number is 60 percent.”
- “With tightening financial conditions and exchange rate depreciations, the debt service burden is a harsh – and for some countries – unbearable burden.”
Capital flows: Emerging and developing countries have experienced sustained capital outflows “for four months in a row,” risking reversal of “three decades of catching up with advanced economies.”
Country example: “Look no further than Sri Lanka as a warning sign.”

1. Bring inflation down

Rationale: “Failure to do so could risk the recovery and further damage living standards for vulnerable people.”
Current stance: “Central banks are stepping up. Monetary policy is increasingly synchronized: more than three-quarters of central banks have raised interest rates and have done so 3.8 times.”
Emphasis on: central bank independence, clear communication, and a data-driven approach.

2. Use fiscal policy to help, not hinder, inflation control

Fiscal objectives: Reduce debt while providing targeted measures to support vulnerable households facing shocks, especially from high energy or food prices.
Trade-off: Growth slowing means “some people will need more support, not less.”

3. Reinvigorate global cooperation

Priority areas: food insecurity and high debt.
Food security actions called for: support those in immediate need, remove export restrictions, promote food production, and invest in climate-resilient agriculture.
Collective initiatives: progress on SDR channeling and operationalizing new IMF instruments.

Common Framework (CF) for debt:
- Need for CF to “deliver on its promise.”
- Encouragement: “the three creditor committees for Chad, Ethiopia, and Zambia are meeting this week.”
- Calls for action: “New rules and timelines should be established for the CF. And it is important to expand coverage to non-DSSI countries.”
- Urgency: “I urge the G20 to come together on a way forward and to do so swiftly. The debt situation is deteriorating fast and a well-functioning mechanism for debt resolution should be in place.”
Special Drawing Rights (SDRs):
- Support for making progress on SDR channeling “to amplify the effect of the IMF’s recent US$650 billion SDR allocation.”
Resilience and Sustainability Trust (RST):
- Acknowledgement: G20 helped establish the IMF’s newest instrument—the RST—with “close to US$40 billion in pledges.”
- Call to action: “Now is the time to turn those pledges into actual contributions for the new Trust to be operational by the Annual Meetings in October.”
Poverty Reduction and Growth Trust:
- Recognition: G20 members have pledged loan resources of “nearly SDR 8 billion (US$10.5 billion) – about three-quarters of what is needed.”
- Expectation: “I am confident that additional pledges will be made soon.”

Climate urgency: “We cannot lose sight of the most pressing crisis of all: climate change.”
Recommendations:
- Scale up financial resources for the climate transition.
- Provide clear policy signals from national governments to decarbonize economies.
- Leverage easing energy prices as an opportunity to “accelerate carbon pricing or equivalent measures.”

International Monetary Fund. Press Release No. 22/261; July 16, 2022.