Opening Remarks by IMF Managing Director Kristalina Georgieva at the High-Level Roundtable Discussion on Low-Income Countries’ Challenges and Concessional Financing

IMF News, April 12, 2023

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Published: April 12, 2023

Context and purpose

As prepared for delivery.
Event: High-Level Roundtable Discussion on Low-Income Countries’ Challenges and Concessional Financing.
Date on page: April 12, 2023.
Audience addressed: Ministers and Governors.

Assessment of low-income countries’ (LICs) situation

LICs were particularly severely impacted by multiple shocks since the pandemic.
Per capita income growth for 2023-24 is projected to 2.8 percent.
- Characterized as the lowest per capita growth since 1990.
- Risk highlighted: further divergence from higher-income countries unless action is taken.
Global context: slow growth and high inflation constrain LICs’ ability to catch up.
Shift in financing needs:
- Move from emergency financing toward strong demand for upper credit tranche programs to build fundamentals, growth, and employment.
Importance of IMF roles emphasized:
- Upper credit tranche programs to build sound fundamentals and institutions.
- IMF programs central to debt resolution negotiations.
- IMF role in mobilizing financing from other partners, with recognition of collaboration with the World Bank Group.
Example of debt resolution support cited: Chad as a case where the common framework outcome was achieved.

Financing provided and gaps

Quadrupling of financing for PRGT-eligible countries since the start of the pandemic.
- Total provided: $24 billion of financing since the start of the pandemic.
- Composition: part emergency financing, primarily program financing.
Current headwinds increasing resource needs:
- Higher interest rates make lowering the cost of lending to LICs harder.
- Result: the resource gap for the PRGT has grown.

Immediate financing targets and mechanics

Urgent first-step requests:
- Close the subsidy gap by providing pledges of $1.6 billion.
- Close the loan resource gap of $4.7 billion.
Leverage effect highlighted:
- Each $1 of subsidy mobilizes $5 of zero interest loans.
Intended near-term outcome:
- By October, closing these gaps can restore access to concessional financing for PRGT-eligible countries at par with access for GRA-eligible countries.
- Emphasis on financial meaning and equality of treatment within the IMF membership.

Medium-term strategy and next steps

Objective: make the PRGT whole and place its longer term financing on a sustainable footing.
Proposed approach:
- Build consensus by the Annual Meetings in Marrakech on a phased, burden-shared strategy to replenish the PRGT so it can provide adequate support to low-income members for the longer term.
Timeline and significance:
- Annual Meetings in October will be hosted by Morocco.
- Noted: first time in 50 years the Annual Meetings of the IMF and the World Bank will go to Africa.
- Framing: opportunity to demonstrate support for the poorest members, especially African members.
Call to action:
- Launch the "road to Marrakesh" immediately, with preparatory inputs (two short videos and floor discussions planned at the meeting).

Key messages and appeals

Urgent collective action is required to prevent further divergence of LICs from higher-income countries.
Strengthening IMF financial capacity for LICs is imperative given increased demand and higher global interest rates.
Closing identified subsidy and loan resource gaps is a tangible, near-term target with a clear multiplier effect.
Longer-term replenishment of the PRGT through a phased, burden-shared strategy is necessary for sustainable support.

Opening Remarks by IMF Managing Director Kristalina Georgieva at the High-Level Roundtable Discussion on Low-Income Countries’ Challenges and Concessional Financing — April 12, 2023