Transcript of April 2023 MD Kristalina Georgieva Press Briefing on GPA

April 14, 2023



JULIE KOZACK, Director, Communications Department, IMF

Ms. Kozack: Good morning, everyone. Welcome to the Managing Director Kristalina Georgieva’s press briefing on the Global Policy Agenda for the 2023 Spring Meetings. We will begin with the Managing Director’s opening remarks before we take your questions. Kristalina, the floor is yours.

Ms. Georgieva: Julie, welcome to your role. Good morning to all members of the press. I would like to start by thanking you for the hugely important work you do often in very difficult circumstances. Far too many of your colleagues have been persecuted. It is a tragedy for them, for their families, but it is also a threat to the very foundation of a vibrant society. Here at the International Monetary Fund (IMF), you are always welcome even when you bring your sharpest pens, and you are most welcome at these Spring Meetings. They are taking place at a time of complex challenges. The world economy has proven remarkably resilient to the multiple shocks over the last three years, but it is yet to overcome the combination of weak growth and sticky inflation.

As you have seen in our latest World Economic Outlook, we project global growth to slow down to 2.8 percent in 2023 and remain weak at around 3 percent over the next five years. This is the weakest medium‑term forecast in decades. Underlying inflation remains stubbornly high. Geopolitical factors affect also the economy, and economic fragmentation has implications for trade and capital flows and downside risks have increased. Fighting inflation and safeguarding financial stability have become more complex with the recent banking sector pressures.

I want to stress that an issue that we all have to be very mindful of is that low‑income countries are particularly vulnerable, given high level of debt. Their per capita income growth lags those better off. That means it is harder and harder for them to catch up. So, in this environment, we have our Global Policy Agenda—it changed again—you know it. We have our Global Policy Agenda, and we concentrate on the path to restore both short‑term and medium‑term prospects for sustainable and inclusive growth. Let me highlight three priorities.

First, restoring price stability and safeguarding financial stability as prerequisites for return to robust growth, so long as financial pressures remain limited. We expect central banks to stay the course in the fight against inflation, holding a tight stance to prevent a de‑anchoring of inflation expectations.

Further efforts to reduce budget deficits is critical to support the fight against inflation and reduce debt, but this is not an easy task. We still have to care about the most vulnerable segments of our societies. And central banks should address financial stability risks where they emerge, working closely with regulators and supervisors.

The key is to monitor risks that may be hiding in the shadows in banks and non‑bank financial institutions or in sectors such as commercial real estate. At this moment in time for the world economy, vigilance is absolutely paramount.

Second, rebuilding the foundations to sustain future prosperity by acting now to advance structural transformations and counter fragmentation. Think of steps to accelerate the digital revolution, improve the business environment, boost human capital and inclusion, and think of the green energy transformation. We estimate $1 trillion a year needed just for renewable energy, an investment that can translate into growth and jobs.

We also need to step up international cooperation to reduce the harm from fragmentation. You are well familiar with our analysis. It shows that the long‑term costs of trade fragmentation alone could be as high as 7 percent of global gross domestic product (GDP). If we add technological decoupling, some countries could lose up to 12 percent of GDP. Fragmentation of capital flows, including foreign direct investments, would be another hit to global growth.

Third, solidarity with the most vulnerable countries. I take pride that here at the IMF, since the start of the pandemic, we have provided nearly $300 billion in new financing for 96 countries. This is more than half of our membership. Just in the six months since our Annual Meetings in October, our Board has approved 23 new borrowing arrangements. Nearly half of our financial commitments in the last three years has been done through our precautionary facilities, like the one we approved for Morocco last week. It is much better to put a buffer and prevent a crisis than to have to respond to a crisis when it occurs.

We have also stepped up support for vulnerable middle‑income countries, including through a temporary increase in the amount members can borrow from the IMF. Recently we have provided financing to countries such as Sri Lanka and Ukraine, and we have used our new tools to meet new challenges. Our Food Shock Window is helping countries cope with the economic consequences of Russia’s war in Ukraine while the Resilience and Sustainability Trust is focused on long‑term challenges such as climate change.

We have five countries already benefiting from the RST. We have 44 expressing interest in it. Yet for the most vulnerable members of our global family, additional support from the international community is essential. Us being here this week, we have to be mindful of our duties to them. And I want to make a double plea on their behalf, help them resolve crushing debt burdens and help ensure that the IMF can continue to support them going forward.

On the first, we now have the global sovereign debt roundtable. It is making tangible progress. It is co‑chaired by the World Bank, IMF, and India as the G20 Chair. We have brought together public and private creditors as well as borrowers, the first time all of them are sitting around the table, to accelerate restructuring cases, including those under the G20 Common Framework, but also those that are not covered by the framework and are pressing.

We met yesterday. I was very encouraged by the positive outcomes. First, we agreed to improve information sharing on macroeconomic projections and debt sustainability assessments at an early stage of the debt restructuring process.

Second, we reached a common understanding on the role that Multilateral Development Banks (MDBs) can play, notably through the provision of positive net flows of concessional finance.

Third, we have a clear workstream, including a workshop in the next weeks on how to access and enforce comparability of treatment. The main purpose, accelerate restructuring. You know I always say, the proof of the pudding is in the eating, so let us see how well we do with Zambia, Ghana, Ethiopia, Sri Lanka.

On the second part of our plea, key players met yesterday to discuss urgent funding gaps in our Poverty Reduction Growth Trust (PRGT). Our concessional financing has increased more than four‑fold since the onset of COVID. Coming into these meetings, we have been calling for $4.7 billion in additional loan resources and $1.6 billion in additional subsidy resources to maintain interest‑free support. I am very encouraged that some of our economically stronger members are already stepping up. Just in the past few days five countries; Ireland, Japan, Portugal, Saudi Arabia and the U.K., have all come forward with substantial new pledges or contributions. We call on all members to work this year to successfully complete the Review of Quotas, the building blocks of the IMF’s financial structure, so we can continue to strongly fulfill our mission.

We have a lot more to do this week. We have a lot more to do after the week is over.

I just want to finish by saying we have overcome enormous challenges these last years. We can and we must do it again. Thank you very much.

Ms. Kozack: Thank you very much, Kristalina. Now we will open for your questions. Let us go with Colby Smith. Please go ahead.

Question: Colby Smith with the Financial Times. While the growth forecasts were not materially different than the last update, the Fund seemed to paint a pretty bleak picture about the outlook and the risks confronting the economy, both in the near and medium term, and yet Treasury Secretary Janet Yellen has urged people not to overdo the negativism about the global economy. So, what accounts for the IMF’s more down‑beat view here; and what are you seeing that Secretary Yellen is not?

Ms. Georgieva: I think we are seeing the same picture. It is just a very complex picture. Let me answer it the following way. I agree with Secretary Yellen, that we have feared recession and at this point in time our projections are for walking on this narrow path that avoids a hard landing. But 2.8 percent global growth is not enough to bring opportunities to businesses and people around the world. And most worrisome is the projection for weak growth over a longer period of time. Why is that the projection? Because productivity has been lagging. Let me remind us, this is what I talked about in 2019, in October, when I first sat in front of you: synchronized slowdown, low productivity, low growth, social unrest.

If we are to overcome that trend of meagre growth that holds us back and holds the aspirations of people back, we have to concentrate on action. It need not be this way. Where we see action: one, structural reforms. It is hard but necessary. Second, finding a pathway to improve security of supplies. We know we have to do it but do it without significantly harming trade and financial flows. Third, prevent what I really fear can be a very dangerous divergence in economic fortunes of better‑off countries that are falling apart.

So, I think the question is, you read the numbers. I do not think that anybody would say, ‘oh, these are fabulous numbers, look at this, oh, my goodness, we are going to grow 3 percent per year over the next five years’. But they are also not horrible. We are not in recession. So, the question of interpretation I think is the one that I would put to you. In my book, we are not in a great place. We see risks increasing, but we also have now a track record over the last years to be remarkably resilient.

Ms. Kozack: Let us go with Eric Martin.

Question: Thank you very much, Managing Director. I would like to ask you about the sovereign debt roundtable yesterday and the advances made there. It seems like there was an advance in terms of more concessional financing coming from International Development Association (IDA), but we understand that there were also elements and objectives still to be met in terms of timeline and actually speeding the process.

We had heard that there was a proposal for potentially a three‑month deadline for countries to provide financing assurances or for the IMF to potentially look at using its lending into arrears policy more actively, more liberally. I was wondering if you might be able to speak a little bit about the timeline challenges and what some of the proposals there are for the next steps in terms of timeline and actually speeding the restructuring process.

Ms. Georgieva: Thank you very much, Eric. I want to start by reflecting on the participants’ own take yesterday. The public sector creditors, traditional, new, the private sector creditors, and also the borrowing, the debtor countries. Their reflection is that this is a breakthrough in a way of finally bringing everybody that has to be at the table together and defining areas where we can reach consensus now in areas of future work.

I spoke about the areas of consensus now. Actually, I want to stress that to my mind the fact that we now have a clear workstream on compatibility of treatment is essential. Unless we have an understanding of compatibility of treatment, we cannot achieve timeliness. We will be stuck in arguing whether this is fair or not.

Where we also have agreed yesterday, we have to work much more concentrated on this issue of timeline. We have not reached an agreement yesterday, but we have not aimed to reach that agreement. Where we concluded is that we have to identify the principles for how timelines are being set. We have to accept that there will be a case‑by‑case decision, but this case‑by‑case decision needs to be within defined timelines, defined parameters. That will be the number one task for us on the agenda for the next round of our engagements.

On lending into arrears, this is a question that many of you are asking. I want to give you the best, the most accurate answer I can. It is an option today. We have a policy of lending into arrears. We actually applied this policy in the case of Suriname. What does it mean? It means if any creditor is yet to come with financial assurances, we are not going to hold the country hostage to this creditor. However, there are two issues. The first one is when we lend into arrears for the country, we are actually kicking the can down the road. We are not resolving fully the debt to a sustainable level. They still have these one or more creditors that are holding, and there that issue has to be addressed.

Secondly, there is always a risk that the country might opt after having received support from the Fund to pay this holdout creditor, creating potentially significant moral hazard and significant difficulties to implement a Fund program. It is an option that we will use when we believe there is no way to do the best one, to be in plan A, and plan A is restructure the debt and give the country breathing space to grow.

Again, I want to be very clear on that. We would not hesitate to use our policy if and when we think there is absolutely no chance to reach the desired outcome, which is restructure the debt of the country.

Ms. Kozack: Let us turn now to Argentina, Paula.

Question: Good morning. In the last review of the program just two weeks ago, the IMF said that policy implementation has become less reliable, and Argentina is going to be in a very contentious Presidential election. Are you confident the government will do what it takes to sustain the program, in particular, to meet the fiscal targets? Thank you.

Ms. Georgieva: Let me just recognize that in the second half of last year, the Argentine authorities have worked on bringing prudent management and meeting the targets of the program. As you know, on March 31, our Executive Board completed the fourth review of the program because of what the country has done. We also know that Argentina was hit by severe drought that has undermined the performance of the economy, and it is harming people in the country significantly. That has complicated the job of policymakers.

We have looked into the implications of this shock. We have partially accommodated those in the modification of the net international reserve accumulation target, but we recognize that we have a commitment from the government to continue to fine tune policies in light of the conditions they find themselves in, and we will follow carefully on how successful they are. It is always about implementation, and it will continue to be about implementation in these very challenging circumstances.

Ms. Kozack: Very good. Do we have a question on Africa? Maybe we turn to Africa. Let us take a question on Africa. I have Julian.

Ms. Georgieva: Ghana. Go Ghana.

Ms. Kozack: Let us go with Ghana, please. Let us go with Ghana, please.

Question: Thank you so much. Managing Director (MD), it appears that your outfit is putting out a strong case for Ghana, which is well appreciated. However, the 32 million people in Ghana right now are awaiting that announcement by your Board. Please, where are we?

Ms. Georgieva: Let me say that we have been in constant contact with the authorities in Ghana. We have worked very hard and very swiftly to have the program for Ghana, a 3 billion support program for Ghana in place. We have been urging Ghana’s creditors to act swiftly. My appreciation for also the proactive role of the Minister of Finance of Ghana in reaching out to creditors. We are expecting that next week there will be discussions among creditors. I can tell you that I use every opportunity myself to urge them to act swiftly.

Let us remember that Ghana for a long time has done really well to tap markets to finance its growth path. It has been like all innocent bystanders, hit by COVID, hit by the war in Ukraine, and it has complicated domestically the ability to finance the budget. So, a country that has a long track record of sound macroeconomic management ought to be supported to return to markets. So, our program is a bridge for Ghana. And to tell you the truth, I am quite optimistic that Ghana is going to move, the creditors are going to move, and we are going to move swiftly. The short answer to you is stay tuned and stay positive.

Ms. Kozack: Let us go to this side of the room. The lady in the green in the very first row. I think right here. Right here in the green. In the green, right here first row.

Question: Thank you so much. I am from the China Central Television. I have two questions. First, about your trip to China. As we know, you visited China last month. What impressed you most in this trip? Another is about China’s economy, and what are your hopes and expectations for China’s economy in the next five years? Thank you.

Ms. Georgieva: Thank you very much for this question. I had a fruitful visit to China. It gave me an opportunity to meet with Premier Li Qiang, as well as other leaders, and discuss the prospects for the world economy, for China’s economy, as well as the importance China has in terms of supporting low‑income countries. We had discussed here the topic of debt. That was one of the issues that I was very encouraged to hear from the Chinese leadership, a commitment to constructively engage and to do its part for the countries that are pressed to restructure their debt.

You asked me what impressed me the most. What impressed was Premier Li Qiang’s very clear message on China continuing to reopen and in pursuit of reforms that can strengthen the prospects for China’s growth.

I have seen how different it is when the economy reopens. And on that basis, to answer your second question, we see China this year rebounding quite strongly. Our projection is for 5.2 percent growth. When I said that in China, the Chinese leadership said, well, that is more than we are projecting. As you know, the domestic projection is for about 5 percent. We have been pleased to see this rebound of China, not only for China, of course, for China, but also because of China’s role in the world economy.

China this year is going to contribute about one third of global growth. We calculated that 1 percent more growth in China translates into 0.3 percent more growth for the economies that are connected to China. This being said, there are significant challenges, and we discussed those with the Chinese leadership. Still, the issue of how to handle real estate actions are being taken, but there may be more necessary. And also, how to redirect the Chinese economy more towards domestic consumption, what policies can work in that regard.

Ms. Kozack: While we are on Asia, let us have a question on India. The gentleman right here, the second row in the middle.

Question: Thank you very much, Managing Director. This is PTI Press. India, as you know, as the G20 President has taken a lead in collectively addressing most of the global economic challenges. How do you see those efforts by India? Secondly, Managing Director, President Biden has nominated in America Ajay Banga as the World Bank President. How do you see this appointment as and what are the key issues that you would like to work with Mr. Banga at the World Bank?

Ms. Georgieva: Thank you for these questions. India is doing an excellent job in focusing the work of the G20 on what matters the most. What matters the most is to move through very complex policy challenges, comparing notes and coming up with the right policy actions. What matters the most is to reenergize global growth. Here India brings its fantastic track record on digitalization and how digitalization can reenergize the economy.

Also, on the very serious question of debt, I want to praise the finance minister for her very active engagement in making the global sovereign debt roundtable a success, as well as India’s participation in debt restructuring in cases where India plays a role. For example, the very important role India plays in the case of Sri Lanka. I very much look forward to continuing to be working with the Indian Presidency.

To your second question, I have known Ajay for quite some time. I think very highly of his leadership skills, but above all, of the commitment to inclusion and opportunities for all that he has demonstrated throughout his life. We have been together on many occasions talking about inclusion, gender, and I would always hear not only substantively somebody who is really very smart but also a beating heart. This is what the leadership of the World Bank is all about, vision but also compassion.

Ms. Kozack: Maybe we can take—why do we not shift now to Middle East. We will take Pakistan, please.

Ms. Georgieva: You need to give the floor to Andrea; she is not going to forgive me ever if she is not given a question. Andrea, it is going to come. Where are we?

Ms. Kozack: Let us start with Pakistan and then Egypt.

Question: This is Ishfaq from Pakistan. I really appreciate the efforts of the IMF on debt restructuring, and we talked about the few countries where the debt restructuring exercise is happening. Pakistan could be the next one in this. It is a very big country. It is the fifth largest country in terms of population, and it is also affected by climate. And the debt of Pakistan, unlike Ghana and Sri Lanka, is not very much market-based. It is bilateral debt and multilateral debt. The climate impact is there. And inflation is really closing to the hyper‑inflation area, especially in food, and there is the challenge of food security in the coming years. So how can we learn from the experiences of Ghana, Sri Lanka, and other countries to not let that happen, what happened in these countries in the past one to three years, to Pakistan? Thank you.

Ms. Georgieva: I have had the opportunity to actually see what climate shock means for the people in Pakistan in 2011. I know that the current flood is much more dramatic than the one that I saw, that I witnessed. No question Pakistan will continue to be on the front line of the climate crisis. That means the country ought to think about building more resilience of communities, think about the future of agriculture in a more climate‑sustainable manner. But to your question, we have been working very hard with the authorities in Pakistan within the context of our current program to make sure that Pakistan has the policy framework that makes it possible to avoid what you are talking about, to get to a point when the debt of Pakistan may become unsustainable. We are not there yet, and it is better not to get there. We are currently also discussing with those who support Pakistan in terms of providing financial assurances so we can complete the program.

My hope is that with the goodwill of everyone, with the implementation of what has been already agreed by the Pakistani authorities, we can complete our current program successfully.

Ms. Kozack: Very good. We will go to Egypt here in the front and then to Andrea. Egypt right here, front row. Front row. Please raise your hand. Yes.

Question: Thank you, Julie. Good morning, Ms. Georgieva. I have two questions. As announced under the Extended Fund Facility (EFF) program approved for Egypt last December, the first review of the three‑pronged loan deal was planned to be conducted on the 15 of March, which paves the way for Egypt to receive the second tranche of the loan. So, could you brief us on the updates on that? My second question is on debt crisis and the inflation threat that places greater burdens on devaluing countries. How does the IMF step up its efforts to back these countries, particularly with the huge financing gap these countries are experiencing? Thank you.

Ms. Georgieva: Egypt, like so many of our members, has experienced extraordinary pressures that come from the shocks of the last years. In the case of Egypt, very high dependency on imports of grain from the area of the war had played particularly a severe role. We have agreed on a sound program that has three critical elements. One, exchange rate liberalization. Two, increasing the opportunity for private sector to deliver jobs and growth in Egypt, expanding the role of the private sector. Three, moderate the long‑term investment projects that are indeed very important and very good for Egypt, but in the current tight environment, they could undermine macroeconomic stability with the speed that was originally designed under different circumstances.

We are now preparing to carry out the review. The teams are working, and I am confident that we would have a good outcome. I want to say that we have seen in Egypt a deeper understanding of how complex not only the domestic environment is but also the regional and global environment is.

On the question of debt, I actually talked about that for quite some time. You say what can the IMF do. What we can and we must do, and we do do, is to recognize that the lending landscape has changed dramatically, but the debt resolution mechanism has not. What we have seen over the last years is the role of nontraditional creditors has increased significantly. The role of private finance has increased significantly. And yet the only well‑tuned mechanism for debt resolution was the Paris Club.

So, if you have a small fraction of the debt covered and a big part of it not covered, that obviously is not a healthy way to deal with a growing debt problem. We take it upon us to support a more inclusive and effective debt resolution process. We have, as you remember, President Malpass and myself, urged the creation of the Common Framework. The G20 Common Framework is helping, but it is not yet a place, neither is it created to be a case where principles, policies, processes can be defined. This is our huge responsibility to our membership. Now, we cannot command the creditors, but if we create a fair atmosphere for discussion, as we have done now, then the path to resolution of problems is clearer. Of course, we finance—let me be very clear on this point. The IMF programs anchor debt resolution. This is why it is so important that we have PRGT capabilities because most of the severe debt problems are in low‑income countries. Not only, we know Sri Lanka, we know Suriname, there are middle‑income countries with debt problems, but most are in low‑income countries.

I can tell you that yesterday gave me a great sense of hope when we called on our better‑off members to ask them to please step up because if the IMF does not have the financial capacity to contribute to debt resolution, how can we ask the others to do their part?

Ms. Kozack: Very good. We are coming to the end, so we have one more question. Andrea will have the last question.

Question: Thank you so much. I wanted to ask you about fragmentation and the global economy. There has been a lot of discussion about friend‑shoring. These are initiatives that are underway here in the United States with partner countries. Yesterday the G7 issued a statement that talked a lot about supply chains and about building bridges with low‑income and middle‑income countries to expand those supply chains. It sounds a lot like fragmentation. It sounds a lot like the world is splitting into camps, and you have warned about that.

Can you just say something about the G7 initiative and whether you are concerned about that and what the implications of that is? Thanks.

Ms. Georgieva: Thank you, Andrea. What we have learned from COVID and then the war is that security of supplies and the reliable functioning of global supply chains is taking a new, higher priority seat in economic discussions and decision‑making. I regrettably have to recognize there is a reason for that. No more we can take peace for granted. Russia invading Ukraine is not only a tragedy for the Ukrainian people, it is a tragedy for the global community because it sends a message that defense expenditures have to go up, the peace dividend is gone, and that more reliance on, you call it friendship, whatever we call it, more reliability that has geopolitical dimension, not just economic dimension, is going to be sought. And then, of course, we also have the impact of globalization that did not benefit everyone. We have not been focused enough on those who were left out or behind from globalization. So, there are reasons why what we see is happening. The question is, can we be more determined to enhance security of supplies but not push the world that far that we are into a second cold war? I believe it is possible. Actually, I thought that the discussion around let us see how we can engage developing countries, how we can think about more vibrant division of labor globally, this is a good discussion.

I am among those who know what are the consequences of a cold war. It is loss of talent and contribution to the world. I do not want to see that repeated. And I think it is possible to avoid going there. We can have some cost. Remember our analysis, Andrea. It says trade fragmentation can cost us between 0.2 percent and 7 percent. That is a long way from here to there. So can we rationally accept there would be some cost, there would be some fragmentation, but keep these costs low.

How can we do it? There are two things. One, we have institutions like the IMF that bring everybody around the same table. It is a place where we can build more common understanding and trust.

Two, we have policymakers that ultimately need to defend the interest of their citizens. Well, if we fail to be more rational, then people everywhere would be worse off. Middle class in rich countries would pay a price as well. So, a bit more cool‑headedness in that process will take us a long way.

This is the end of our press conference, ladies and gentlemen.

Ms. Kozack: This does conclude the press conference on the Global Policy Agenda. The transcript will be available on and a few important reminders, because I know there are still a lot of questions, first, the Global Debate Seminar will take place today at 2:00 in the HQ1 Atrium, and the MD will join a distinguished panel to discuss pressing topics shaping the global economy. You will have more opportunities to ask your questions.

Tomorrow we will begin your regional press briefings. Actually, they begin today, and they continue tomorrow. Check the schedule to attend the regional press briefing that is of interest to you. And tomorrow we will have the IMFC press briefing with the Managing Director and IMFC Chair Nadia Calviño. Thank you very much and have a wonderful day.

Ms. Georgieva: We have a second bite of the apple tomorrow. Thank you very much, everybody.

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