Speech

Remarks by the IMF Managing Director Kristalina Georgieva at the Paris Summit Closing Press Conference

June 23, 2023

Lightly edited after the delivery.

At this Summit, we had a very engaged and frank discussion. And it is so very important that we did.

Our world is changing rapidly. It is affected by more frequent and severe shocks, and it is a world with more tensions than we need at this time.

We need each other the most today.

Our economy has proven resilient in spite of the shocks we experienced: COVID, war. But it hasn't been without a cost. Interest rates are up. Debt burdens are rising. The cost of living is high. Poverty and Inequality are increasing.

And the consequences of the climate crisis are upon us. And they hit hardest poor people in poor and vulnerable countries that have done the least to cause this problem.

So, it is time to step up.

It is time to step up, it is time for leadership and – President Macron, President Ruto, Secretary Yellen, and Ajay – we have to live up to the expectations that are put on us.

I want to talk about three topics that are directly relevant to our work in the IMF, that have been high on the agenda over these two days.

First, debt. I completely agree with President Ruto, that it is a top priority to ease the debt burden on countries, especially those who have been hit by exogenous shocks. Countries with good governance but suffering from these shocks terribly.

We have made progress.

We do have now the G20 Common Framework delivering for Chad, for Zambia, and also for countries outside of the Common Framework such as Sri Lanka and Suriname. They are benefiting from bringing creditors – both public and private - together.

We recognize we have to accelerate debt restructuring. Make it predictable, timely and provide breathing space to debtor countries through debt suspension during negotiations.

This is what we have been advocating for.

We now have the Global Sovereign Debt Roundtable that brings together, for the first time in the last decades, traditional Paris Club creditors, non-Paris Club creditors – such as China, India, Saudi Arabia, Brazil – and the private sector together with the debtor countries.

I heard this call yesterday. So, President Ruto, you're here representing these countries, I can say to you - yes, this is being done.

But we have to go beyond that. We have to recognize that debt and climate are correlated and will become even more so.

And therefore, we need to work on debt for climate swaps.

The World Bank has shown leadership on debt suspension clauses in their programs.

At the IMF, we have an instrument called the Catastrophe Containment and Relief Trust that allows us to directly provide debt relief to poorer countries when they're hit by shocks.

We have used it in the past – we used it mostly for COVID – and we are determined to use it for climate shocks as well.

Talking about climate, let me turn to the second area directly relevant for our work.

The IMF has over the last years, integrated climate considerations into everything we do, because climate is macro-critical.

We have integrated it in fiscal policy, in monetary policy, in data and of course we also have a financial instrument.

Let me stress one area where the IMF has been tirelessly promoting action - and it is on carbon pricing.

Our analysis shows that without a carbon price, there is no chance that we will meet the 1.5 degrees Celsius target by 2030. We will miss it.

So, we need to get this incentive in place.

We advocate for an inclusive approach that includes taxes but also trade, as well as regulatory actions, as long as they deliver the right trajectory: upwards on the carbon price.

We have proposed a carbon price floor that is fair: poorer countries pay less, middle-income countries more, and rich countries, of course, have the highest price. And I agree there is space to think of international deployment of some of these resources.

We are not there yet but there is movement.

Just five years ago, carbon pricing covered 17 percent of global emissions. Now it covers around 25 percent.

There is only 75 percent more to go, but when there is a will there is a way.

Talking about financing – this is the third area that is very relevant for the IMF.

We have created a new instrument: the Resilience and Sustainability Trust. It lends – for first time in the history of the IMF – long-term affordable financing with a 20-year repayment period and 10-and-a-half year grace period.

How did we fund it? We funded it with the good will of countries like France - and we look forward to the U.S. contributing – that have taken part of their new SDR allocation and, per the promise made, they have made this available to the IMF to enable us to provide this long-term, affordable lending.

We have reached the commitment pledged in 2021 –the pledge of US$100 billion in SDR channeling. Around US$60 billion of this pledge is already working at the IMF in the Poverty Reduction and Growth Trust and in the Resilience and Sustainability Trust.

And I can tell you it makes a difference - we made two announcements here for Barbados and for Rwanda.

How this money - in partnership with the World Bank Group, in partnership with the Inter-American Development Bank, with national development banks, and based on analysis provided by our sister institution - how it makes a difference in accelerating the green transition. Bringing more ability for countries to face the challenge and to adapt to the challenge of climate change.

We have seven countries that have benefited, and we have 40 countries expressing interest. And because of that I want to announce today we are lifting our ambition to increase by 50 percent the size of the Resilience and Sustainability Trust, so we can respond to needs.

I want to finish with the following.

When I started in my job, the first thing that I did was to go to the hotel in Bretton Woods and to sit in the room, a very small room where it all happened. Only 44 countries at that time. By the way, all the delegations were led by men. Most of them came by boat.

Since then, the number of countries in the world has more than doubled. The number of people more than tripled. And global GDP increased more than 10 times.

It is a different world.

And obviously, we have to change.

We have been changing as the world changes and I completely and totally commit to changing for the future with you, our members.

And today, and yesterday, we got impetus for what it means to change. To be more inclusive, more representative, well-resourced, and serving our members with professionalism and empathy.

Thank you.