Managing Director's Remarks to the Three Seas Initiative
September 6, 2023
President Iohannis, thank you for the opportunity to share a few thoughts today with leaders from the countries unified around the Three Seas Initiative.
First, to acknowledge that your meeting takes place at a challenging time, a time of weaker growth and widening divergence among regions and sectors of the economy.
We all know that Russia's war inflicts a terrible toll on Ukrainian people. It also remains a drag on prospects across the Three Seas region.
You all deserve praise for the strength of your policy responses and the resilience of your economies. Nevertheless, while we do see prospects for growth improving a bit next year, the fight against inflation has proven more difficult, meaning that higher prices will continue to weigh on vulnerable families for a while. And tighter financial conditions will make the economic environment more challenging than it was before the pandemic.
A wide range of risks, from additional war-driven shocks to food and fuel prices, the ongoing challenges of geopolitical fragmentation, climate change—they're all on your shoulders.
This takes me to my second point. To mitigate these risks and speed up growth in years to come, we must meet the challenge this conference has set: to respond innovatively to new realities and growing investment needs.
Going back down memory lane, think of how the Czechs, Slovaks, and Slovenians had their companies seize the opportunities in front of them a generation ago when their countries joined the European Union. The opportunities are different today, but as supply chains, technologies, and trade shift, one thing remains the same:
Countries that get the fundamentals right will be more successful.
What does that mean? Well, first comes economic stability. This means fighting inflation until the battle is won. It also means that monetary and fiscal policy must work together and that we should never lose sight of the most vulnerable people in our societies.
Next, for this region, maintaining reliable energy supplies is crucial. Last year, European countries collaborated to tap various sources and supply routes to quickly wean off Russian gas. The same collaborative spirit is needed to urgently transition to climate-friendly, sustainable energy. Great opportunity for growth and jobs.
And for this Three Seas Initiative, from the very beginning, investments in transportation, and in digital infrastructure have been just fundamental. At the IMF, we ran some simulations suggesting that their impact could be doubled over the next 10 to 15 years if they are done right. This means improving connectivity across borders and regions, and achieving the same efficiency of public investment as the EU-15 countries.
We know that well-designed regulations would make it possible to ensure equal access to this new infrastructure for all users, vastly expanding growth prospects, especially for small and medium-sized companies.
Let me finish with the business climate. For it, making the workings of the government more transparent and more efficient is so essential to increase the competitiveness of the region as shifts in global supply chains take place, and companies choose where to invest for the long-term. This is an area in which we at the Fund are happy to partner with each and every one of you.
We know how valuable the Three Seas Initiative has been as a catalyst for much needed private investment. Your focus on working together to build regional infrastructure tackles a key growth bottleneck, and it can lead to collaboration in other areas.
As you work to strengthen this region's prospects, we stand by you. Because we could not agree more with Romania's theme for this conference: Together, we are stronger.
Thank you.