Transcript of IMF Managing Director's Press Briefing on the Global Policy Agenda

October 12, 2023


Kristalina Georgieva, Managing Director, IMF

Moderator: Julie Kozack, Director, Communications Department, IMF

Ms. Kozack: Good morning, everyone. It is a pleasure to be here with you this morning. My name is Julie Kozack. Salaam alaykum. Thank you for joining us this morning for the Managing Director’s Press Briefing on the Global Policy Agenda for the 2023 Annual Meetings. We will begin with Managing Director Kristalina Georgieva’s opening remarks, and then we will turn to your questions. Kristalina, the floor is yours.

Ms. Georgieva: Thank you very much for being here. Salaam alaykum. It is my great pleasure to welcome the media to our Annual Meetings here in Marrakech. And on behalf of the staff of the IMF, of all of us, I want to thank the Kingdom of Morocco for generously and warmly hosting our Annual Meetings while still healing from the terrible earthquake on September 8.

We share the pain of those who have been affected. We admire the swift response of the Moroccan authorities and the show of solidarity of the Moroccan people. I saw a glimpse of it when I visited kids in newly assembled temporary classrooms. Their smiling faces are a testament of Morocco’s bright future. Unfortunately, far too many countries and communities are affected by natural disasters and worse, by wars, in Ukraine and now in the Middle East, that cause tragic loss of civilian lives and tremendous suffering. We mourn the victims. We pray for peace.

We are experiencing severe shocks that are now becoming the new normal for a world that is weakened by weak growth and economic fragmentation. As you have seen in our latest World Economic Outlook, we project global growth in positive territory but only at 3 percent this year and 2.9 percent next year. We expect growth to remain low over the medium term, and we are faced with deepening divergence in economic fortunes. Successive shocks since 2020 have pushed global output down by $3.6 trillion as of this year. This loss is unevenly distributed.

While the U.S. has already recovered to pre‑pandemic levels, most of the rest of the world did not, and low‑income economies have been hardest hit because they have had extremely limited buffers to begin with, so it was hardest for them to protect their economy, to protect their people.

Inflation is down, but it is still above target in many countries, so interest rates will have to remain higher for longer, throwing more cold water on already anemic growth.

What should be our policy priorities? You are familiar with this, our Global Policy Agenda. And in this edition of it, we focus on, first, winning the fight against inflation. Price stability is a prerequisite for growth. It also protects people, especially the poorest members of society.

Second, we need to safeguard financial stability. As we have seen in recent weeks from the moves in bond yields in the U.S. and Europe, markets have been adjusting in an orderly way to the realization that interest rates would stay higher for longer, but a sharp further tightening of financial conditions could hit markets, could hit banks and non‑banks, which is why strong financial supervision is essential.

Third, after a period of increased public spending, the time has come to restore fiscal room so countries can respond to future shocks, make vital investments, and bring down debt. In most cases, this means tighter and better targeted fiscal policy. Reprioritizing spending and mobilizing domestic revenues, especially in emerging markets and low‑income countries, is now even more important.

Fourth, we need to boost medium‑term growth. Today we simply do not have the growth that we need to heal from the impact of the shocks and provide opportunities to people so they can see the standards of living going up. Bringing modern infrastructure enables countries to foster digital, green growth. Strengthening governance creates room for businesses to flourish and investing in people prepares them for the job opportunities for tomorrow.

Our research shows that smartly packaged reforms can have a big, short‑term impact, lifting output as much as 8 percent over four years in quite a number of countries.

Call for international cooperation in this world of more frequent and severe shocks is what we want to amplify during these meetings.

We must boost our collective resilience through working together. And this week we are making tangible progress in this area.

Alongside the World Bank and our Moroccan hosts, yesterday we released the Marrakech Principles for Global Cooperation. They lay out the broad framework for harnessing multilateralism for the benefit of all, for the good of the world.

During these meetings, we aim to put solidarity in action by increasing our capacity to support our low‑income members. I am pleased to share that there are now 40 member countries helping us get closer to our fundraising targets for the Poverty Reduction and Growth Trust (PRGT), which provides zero interest rate loans to low‑income countries. I can tell you it warmed my heart yesterday when we met with contributors to see how much more expanded the family of PRGT contributors are, big countries, small countries, rich countries, poorer countries coming together for the benefit of the most vulnerable in our global family.

We also will secure the full amount of the $40 billion that have already been pledged by donors to our new Resilience and Sustainability Trust (RST), which offers financing to help vulnerable low and middle‑income countries cope with the existential threat of climate change and some encouraging signs that we will exceed the 40 billion.

Next, by advancing the discussions on the increase of IMF’s permanent quota resources with the goal to reach an agreement by the end of this year.

For many of you, you know it is vital to make progress on debt through the G‑20 Common Framework and the global sovereign debt roundtable, which will meet later today. Consensus is growing around difficult issues, such as cutoff dates, comparability of treatment between official and private creditors, as well as how we handle the process of debt restructuring in a timelier manner.

We believe it is important also at these meetings to demonstrate we are capable to expand the voice of emerging markets and developing countries at the Fund. There is a lot to do to achieve it. During these meetings, the first time in 50 years taking place in Africa, I am very hopeful that our members will agree to a third African Chair at our Executive Board, from two to three, more voice to Africa.

I want to conclude with the Morocco’s national football team, the Atlas Lions. They made history last year when they became the first African and Arab team to reach the semifinals of the World Cup. Their recipe for success, the understanding that no single player can win the game alone, but together they can take on the football giants. May this be our destiny, to move forward together through thick and thin. Shukran!

Ms. Kozack: Thank you very much, Kristalina. We will now turn to your questions. Since we are in Morocco, I will go right here in the front row, with Ouafa, please.

Question: Good morning, Managing Director. I am a financial reporter for the first Moroccan channel of communication. My question is the following. Salaam alaykum, as you said yourself.

The world today is faced with several crises, political crises in many areas of the world, and this will have an impact on an already fragile global economy weakened by the pandemic. Today, what are the measures that you count on taking to help emerging economies like Morocco?

Ms. Georgieva: First, congratulations to Morocco for having consistently and firmly pursued a course of reform over the last decades. Since the 1990s, as a result of these reforms, income per capita in real terms in Morocco nearly doubled. People are twice better off than they were. And we see the Moroccan economy being very dynamic, diversified, oriented toward the future, green energy, the ability to lift up the productivity in agriculture and, very important, investing in Moroccan people. So, you are asking me what can be done in this more difficult global environment. Well, first, countries building strong fundamentals. It is like here in Morocco, the houses that were built on a sound foundation, they were not affected by the earthquake. And this is why the IMF so strongly recommends pursuing structural reforms to increase that resilience, building strong institutions so prevention and response to shocks can be effective.

Second, we recognize that the world is changing very rapidly and that demands from policymakers, to be agile and adaptable. No more we can set up a strategy and plan for years and years in the future. We have to have vision where we want to go but then be adaptable in the way we get there. Again, Morocco is a very good example of doing that.

Three, we have to stand firm against the forces that divide us. In a more shock‑prone world, we need each other even more. Do not fall for the temptation to point fingers, oh, it is somebody else’s fault. Go with holding hands. When we are here, this is what we want to do, bring the membership together despite all the tensions, despite all the complexities. We can make progress on economic policy, and we can demonstrate that solidarity that you demonstrated here in Morocco after the earthquake. It is a value for the world community.

Ms. Kozack: Very good. Thank you. Let us go to this side, gentleman in the blue blazer.

Question: Thank you. I am with CNBC Africa in Johannesburg. What do you say to critics who are saying that the G‑20 Common Framework is not working and that—or it is too slow and that a key solution perhaps is not being considered and that is debt cancellation, particularly given the burden that it is having on the poorest countries, many of them on the continent?

Ms. Georgieva: I say be firm and relentlessly pursue the objective of delivering for the countries that need debt restructuring, easing of the burden of debt. I agree with you, the Common Framework has been slow to deliver to countries that turn to it for support, but we see an encouraging sign that the time taken to reach an agreement among creditors is shortening with every step. It took 11 months for Chad, for the creditors of Chad to provide the Fund with financial assurances needed for us to help the country. So, from our Staff Level Agreement to going to the Board, 11 months. It took nine months for Zambia; six months for Sri Lanka; five months for Ghana. And now we have discussions ongoing on Ethiopia, and I hope this trend will be sustained.

The Common Framework is new, and it brings together a very diverse group of creditors, the traditional creditors, the Paris Club, but then new creditors, China, Saudi Arabia, India, Brazil, the Emirates, and a very diverse group of private creditors. We have seen in the past, it has taken quite a long time for the Paris Club to fully codify the way it functions. So, my plea is pressure, pressure for speed and efficiency, but do not throw the towel of the Common Framework because if we lose it, then we are back in a much less predictable environment.

I do hear the legitimate calls of African countries, not only African countries, but countries also all over the world that are burdened by debt, especially painful to see when some of this debt is because of climate‑related shocks, because of a problem these countries have done nothing to create. But we need to assess objectively and realistically. Debt cancellation requires all creditors to agree. Having the concomitant of creditors and their different configuration in every single case makes this excruciatingly difficult. And therefore, a case‑by‑case approach, when we identify the creditors, creditors come together, form a Creditor Committee, and then we as institutions, the IMF together with the World Bank, we provide the parameters of what they need to agree on. This is today the way debt restructuring is delivered.

I want to recognize that we have to think creatively how we can do more. At the IMF, when COVID hit, we came up with innovation—and it was a trust called the Catastrophic Containment and Relief Trust (CCRT). We use money from this trust to give to our poorest members, so they do not have to pay us, they do not have to serve their loans to the IMF for a whole period of two years—1 billion in de facto debt relief provided by the IMF with the contributions of donors.

We also have to think about how we can better align debt restructuring, debt relief with the impact of the climate crisis. We at the IMF, we are doing some work in this area. It is not easy, but that kind of thinking of a solution that may not have existed before that can help countries obviously is something we must all pursue.

We have created a very important avenue to accelerate debt restructuring. It is called the Global Sovereign Debt Roundtable. It is hugely important because for the first time since the debt landscape has changed, the creditor landscape has changed dramatically, we have the traditional creditors, Paris Club, the new creditors, China, Saudi Arabia, Brazil, India, the private‑sector creditors represented at the roundtable, and very important, representatives of the debtor countries.

As I said in my opening, we are making good progress in coming up with clarity on what are the decisive issues, how we can overcome them, so there can then be speedy progress.

Ms. Kozack: Very good. Thank you. We will go to this side. I will take the woman in front, the white jacket, please.

Ms. Georgieva: Women with white jackets united!

Question: Thank you very much for taking my question, Lubna Bouza, Sky News, Arabia. My question to you, MD, what is the IMF’s take on the war that broke between Palestine and Israel? What is the impact—potential impact on the economies of the region and on broader energy prices and security? Thank you very much.

Ms. Georgieva:What is our reaction to that? It is heartbreaking to see innocent civilians dying. An attack from one place on another causing also reciprocity in response, who pays the price? It is the innocent who pays the price.

In terms of economic impact, we are very closely monitoring how the situation evolves, how it is affecting especially oil markets. It is too early to say. We have seen some up and down of oil prices. We have seen some reaction on markets. As I said, we will be closely monitoring this. Very clearly this is a new cloud on not the sunniest horizon for the world economy, a new cloud darkening this horizon that is not needed. Pray for peace.

Ms. Kozack: Thank you. We will go to the center, the woman here in the pink scarf.

Question: Good morning. I am from Colombia. Latin America and Caribbean economies are very fragile to various crises. We are still dealing, for example, with the consequences of Ukraine and the Russian war and also with the pandemic consequences. How can economies like this protect themselves from new shocks, for example, what is happening with Israel and Gaza; and how can governments improve their economies, so they do not feel this shock so hard on them? Thank you.

Ms. Georgieva: Let me start by recognizing that many countries in Latin America and the Caribbean have been very prudent over the last years in building sound macroeconomic and financial policies. We have seen quite a number of these countries acting early against inflation, and this is paying off because they could earlier move towards normalization of interest rates. When we look at the current situation and the future, there are three things countries can do. They are doing quite a lot of it. The first one is in good times build buffers. When commodity prices are up, do not squander the rainfall. Save some of it. Well‑functioning financial arrangements can be a strong protector, and also, they can provide a pathway for longer‑term investments in growth in these countries.

Secondly, when faced with a drop in commodity prices, adjust fiscal policy quickly. Target the most vulnerable, not everybody. Make sure that your money stretches the farthest it could. And thirdly, and this is common sense, diversify the economy. Decrease the dependency on commodity prices. Right now, countries are in a position to watch the anemic growth in the world economy that can translate into lower commodity prices. We are in a more shock‑prone world, so there may be shocks that cause the opposite, swing up of prices. Obviously we follow closely these price dynamics, and again if you have more, save some of it because I do not know when the next shock is going to be. I just know it will come.

Ms. Kozack: We will give the gentleman right in the front the opportunity now.

Question: Thank you so much. Good morning. My name is Iaroslav Dovgopol, Ukrainian news agency, Ukrinform.

Obviously and unfortunately Ukraine became a part of the global agenda because of the war. My question is about the EFF program for Ukraine. Recently the IMF mission conducted technical discussions in Kyiv in the frame of the second review of the EFF program, and you personally met Ukrainian authorities here in Marrakech. May I ask you, could you please assess the current progress of implementing the benchmarks, the structural benchmarks of the EFF program by the Ukrainian side? Thank you.

Ms. Georgieva: The Ukrainian economic team has been outstanding from the early days of the war. And this is why we have been able to agree on a program, a very ambitious program delivering large‑scale financial support for Ukraine. As you know, the size of the IMF loans, slightly over 15 billion, mobilizes 115 billion in financial support over four years. Of course, this financial support has to be grounded in strong performance under the program. This strong performance is there.

We have completed our first review in June with high marks for the actions of the Ukrainian authorities in raising revenues, collecting taxes. At that time, 36 percent of taxes to GDP. I know many economies not in a war that can barely reach 15 percent. And here is Ukraine, 36 percent taxes to GDP. Improving governance and putting in place anticorruption protection, making the spending well‑targeted to social services, health, education, ensuring that pensions are paid, and bringing inflation down.

The second review, the one you talked about, in this review we registered three very important achievements. One, restoring growth. We now project growth to be around 3 percent. We had a range of 1 to 3 percent. We are at the higher end of the range.

Two, inflation is down in single digits. It was high. It dropped because of this prudent policy; it dropped down.

Three, reserves are solid, and because they are solid, the Central Bank of Ukraine is in a position to move towards a managed flexible exchange rate from a position of strength. We have been very clear that we need demonstrable progress on watching the money. And in that sense, we now have a law to restore asset declarations, and we are working with the Ukrainian authorities on all aspects of the program.

We have reopened our office in Kyiv that allows us to have day‑to‑day engagement with Ukrainian authorities. I am very impressed by Minister Marchenko, by the Central Bank governor, by the whole economic team. I can say the sincerity with which they approach their duties, the sense of obligation to the Ukrainian people, do not waste money, use it well. And the sense of responsibility to those who support Ukraine are admirable.

Ms. Kozack: Thank you very much. We will go to this side of the room. Let us take the woman, first row, first seat. Yes.

Question: Good morning, MD. I am from Egypt. Can you update us on the status of the IMF program of Egypt and your engagement with the Egyptian authorities? Thank you.

Ms. Georgieva: Thank you very much for your question. As I am sure you know, the IMF has a long‑standing close partnership with Egypt. When the pandemic hit, we provided exceptional support to Egypt, $8 billion, and then we followed with the $3 billion Extended Fund Facility. Egypt has made good progress on a number of fronts, fiscal policy, the implementation of privatization strategy, the engagement with our team on how to best conduct monetary policy in these very challenging times. And our discussions are very much focused on making sure that Egypt succeeds.

We are currently in close engagement to define the dates for mission so we can make that progress I am talking about. My respect to the Egyptian authorities, the Ministry of Finance, the Central Bank, they are handling very difficult challenges, and they are doing that well.

Ms. Kozack: Very good. Let us go over here, gentleman second seat, Jiji Press.

Question: Thank you very much. My question is on the Poverty Reduction and Growth Trust to deal with future shocks, as you mentioned, and you have encouraged the member states to boost or contribute to the Fund further. Did you get the pledges or resources further to manage the Trust’s sustainability in the longer‑term yesterday?

Ms. Georgieva: Thank you for this question. We came here with a dual objective, to make sure we close the gap in subsidy resources currently in existence and, second, to think through how we can put long‑term PRGT on a sustainable footing. Yesterday we made excellent progress towards the first goal, and we heard some very good suggestions from the membership on how to address the second one. I want to praise Japan. Japan made yesterday a very impressive pledge to the subsidy account of the PRGT, which made Japan the largest contributor, 20 percent of what we are going to provide as zero interest rate loans—subsidy for zero interest rate loans comes from this generous contribution, so I take the opportunity—you are asking me this question from the bottom of my heart to thank Japan for that generosity.

Beyond Japan, yesterday we have heard quite a number of new pledges, and we got some indications that when the Ministers are in town during our IMFC, there will be more that would close the current gap, the one that was identified in 2021. More importantly to me is the recognition that in this time of more geopolitical tensions, we have significantly expanded the number of contributors. One third of the contributors are emerging markets and developing economies. They provide quite a significant part of the new pledges. Beyond the money, that signal that on issues that are of crucial importance, we can unite and make decisions, that signal came yesterday, and it will be amplified on Saturday during the IMFC meeting.

Ms. Kozack: Very good. We are coming to the end. The last question, the middle, Andrea.

Question: Thanks so much. You said it is a little early to say what the impact is from the war in Gaza, but you have written and spoken about fragmentation and the global economy. Can you say a few words what you think about this latest shock and whether it will exacerbate that sense of fragmentation in the global economy and whether the IMF and other institutions are doing a good enough job sort of anticipating those shocks? You kind of have a pallet of risks when you create your WEO and outlook, but is this current new normal, does it require a different calibration of the way that you assess risks? Thanks so much.

Ms. Georgieva: Thank you, Andrea. We have been increasing work we do in that anticipation, precautionary manner. We now run quite intensively internally at the Fund scenarios. We have been for now some time having to think of the unthinkable scenarios and what would that mean for the Fund. You are right. We do need to build more agility in terms of anticipating shocks and being quick to respond.

The Fund demonstrated with our response to COVID that this is an institution capable of speed and impact. The Independent Evaluation Office of the Fund has assessed our COVID response very positively. And it is a comprehensive response, assessing the nature of the crisis very quickly, coming up with debt relief for the poorest members, one that I mentioned in the previous answer, the close to 1 billion debt relief, very rapidly coming up with emergency financing. This is our instrument to respond to unanticipated shocks. We provided the first loan—emergency loan to Kyrgyzstan, one week after the WHO announced the pandemic. Very importantly, we have moved towards an injection of reserves and liquidity through the Special Drawing Rights on unprecedented scale, $650 billion. But then we also provided emergency financing quickly and moved to policy loans that help countries not only respond to the shocks but build stronger fundamentals.

I am describing this because in a way this is our playbook for certain massive shocks to the world economy. And the reason we are encouraging our membership to come up with an agreement on quota increase for the Fund is because it is central for that capacity that we have more financial strength, more financial resources.

Going to the first part of your question, I cannot predict today how this will evolve. All I can say is that in a world where geopolitical tensions can flare quickly, we have to have to be concentrated on two things, what is it that we must cooperate on, because otherwise the world will be in trouble, like climate change. And two, where can we pragmatically define a path for cooperation in a way that bridges different views. And I can tell you—Andrea, you know me. I am an unwavering optimist. We define our destiny. So, as difficult as it might be, engage in discussions, identify areas of consensus, build on this consensus to take decisions that would improve the fate of people everywhere. Relentless, this is what we must be. Thank you.

Ms. Kozack: Thank you very much, Managing Director. This concludes our press briefing. Thank you all so much for joining us. We will post the transcript later today on our website, and if you have any further questions, please do reach out to our media relations team. They are available in the press center, as I think you know by now and I wish you all a wonderful weekend. Shukran and merci.

Ms. Georgieva: Thank you.

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