A Story of Hope and Opportunity for the Next Generation, IMF Managing Director’s 2023 Annual Meetings Plenary Speech

IMF News, October 13, 2023

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Published: October 13, 2023

Introduction

Speech by Kristalina Georgieva, IMF Managing Director, delivered at the 2023 Annual Meetings Plenary in Marrakech, Morocco, October 13, 2023.
Opening acknowledgements and condolences for recent disasters and conflicts.
Noted significance: Annual Meetings return to the Arab world after 20 years and first time on the African continent in 50 years.

The Story of the Last 50 Years — key observations

Population has more than doubled from 4 to 8 billion.
Since 1973 global GDP per capita has more than doubled.
IMF membership grew from 125 in 1973 to 190 today.
Major advances in health, education, and technology alongside persistent dislocation, poverty, and inequality for many.
Periods of turmoil include oil shocks in the 70s, the Latin American debt crisis, the Asian financial crisis, the global financial crisis; and in the past three years: a global pandemic, war in Europe, and a cost-of-living crisis.
Characterization: “extraordinary but disrupted progress” with massive shifts in the world economy.

The Story of the Next 50 Years — scenario and central question

Thought experiment using AI: speculative 2073 vision including renewable energy, AI-driven industries, space exploration, enhanced global connectivity, digital currencies, revolutionary healthcare, and efforts toward economic inclusivity — explicitly labeled as speculative.
Central policy question: how to capture benefits of transformation and manage associated risks.

A Difficult Starting Point — current macroeconomic assessment

Global recovery described as slow and uneven.
Growth currently at 3 percent, “well below the average of the two decades before the pandemic.”
Medium-term growth prospects described as the weakest in decades.
Economic “scarring” differs across countries, with emerging market and developing countries hardest hit.
Warning of dangerous divergence after a period of convergence, exacerbated by fragmentation, climate change, and fragility—many countries at a breaking point.
Special emphasis on Africa as home to the world’s youngest population; closing income gaps and generating job-rich growth identified as vital.

Writing a Better Story for the Next Fifty Years — strategic priorities

Two groups of “no regrets” actions:
- Investment in strong economic foundations.
- Investment in international cooperation.
Reference to “The Marrakech Principles” announced with the World Bank and the Government of Morocco.

Investment in strong economic foundations — policy prescriptions and impacts

Core policy prescriptions:
- Price stability is key; fighting inflation remains paramount.
- Safeguarding financial stability with strong supervision amid a “higher-for-longer” era and risks from sharp tightening.
- Prudent fiscal policy to restore fiscal room because debt and deficits are well above pre-pandemic levels; prioritize spending and adopt credible medium-term fiscal frameworks.
- Transformational reforms: improved governance to fight corruption, streamlined regulation, reforms to boost trade and improve access to capital, and increasing labor force participation—especially for women.
- Invest in people, notably education to prepare young people for future jobs.
Quantified impacts and resources:
- “The right package of reforms could boost output levels by up to 8 percent in four years.”
- Domestic resource mobilization potential: tax reforms alone could add up to 5 percent of GDP in revenue for emerging markets—and up to 9 percent for low-income countries.
- Fund priority: work on domestic resource mobilization.

Investment in global cooperation — priorities and mechanisms

Climate and trade emphasized as obvious examples.
Two highlighted areas where IMF plays an active role:
- Debt:
- “More than half of low-income countries remain in or at high risk of debt distress.”
- “About a fifth of emerging economies face "default-like" spreads.”
- The Common Framework is delivering debt restructurings slowly.
- The Global Sovereign Debt Roundtable (established by the Indian G20 Presidency, the IMF, and the World Bank) is bringing creditors and debtors together with promising signs.
- Global financial safety net:
- IMF described as the “insurer of the uninsured” with a prominent role over the past three years.
- Actions since the pandemic:
- Provided about $1 trillion in liquidity and financing.
- This came via the $650 billion SDR allocation and $320 billion in lending to 96 countries, including 56 low-income nations.
- Activated direct debt relief programs for poorest members.
- Mobilized emergency financing during the pandemic.
- Provided full-fledged programs and precautionary credit lines for stronger members.
- Launched the Resilience and Sustainability Trust (RST) offering long-term, affordable resources to vulnerable low- and middle-income countries.
- One year after operationalization, 11 countries are benefitting from RST support.
- Channeling of SDRs: work with stronger members to direct SDRs to vulnerable members has generated around $100 billion in new financing through trust funds, especially the Poverty Reduction and Growth Trust (PRGT) and the RST.

IMF institutional needs and reform priorities

To remain central to the global financial safety net, the IMF needs urgent strengthening on two fronts:
- Boost permanent quota resources to bolster capacity to support members with lower financial buffers.
- Replenish subsidies that enable the PRGT to provide zero-interest loans to the poorest members.
Governance adaptation:
- Continue work to better represent membership and global economic changes.
- The possibility of adding a third Chair for Africa to the Executive Board cited as a welcome step.

Conclusion — institutional strengths and outlook

IMF’s strength grounded in trust of its 190 members.
Praise for Fund staff and management; acknowledgment of partnership with the World Bank.
Closing image from a Malhoun poem referencing Marrakech and the metaphor of finding the key to opportunities for the next generation.

Source: Speech by Kristalina Georgieva, IMF Managing Director, “A Story of Hope and Opportunity for the Next Generation,” 2023 Annual Meetings Plenary Speech, Marrakech, Morocco, October 13, 2023.