Transcript

Transcript of a Press Conference of the Chair of the Intergovernmental Group of Twenty Four (G24) on International Monetary Affairs and Development

April 16, 2024

Moderator: Pavis Devahasadin, Communications Officer, IMF

Chair: Ralph Recto, Secretary of Finance, Philippines.

Ben Akabueze, Director General of the Budget office of the Federation, Nigeria.

Leonardo Madcur, Executive Director, IMF

Director: Iyabo Masha, G‑24 Secretariat

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P R O C E E D I N G S

Mr. DEVAHASADIN: Good morning. I am Pavis Devahasadin, communication officer from the IMF's Communications Department. Thank you very much for waiting.

I would like to welcome everyone here in this room and our online audience to the press conference of the Intergovernmental Group of Twenty‑Four on International Monetary Affairs and Development, or G‑24.  

Before we begin, I would like to remind you that we have simultaneously translation in English, French, and Spanish.

Without further ado, it is my honor to introduce the distinguished panel at the table. The Chair of the Minister of the G‑24, at the center, is Mr. Ralph Recto, Secretary of Finance of the Philippines. To his right, Mr. Leonardo Madcur, Alternate Executive Director for Argentina at the IMF Executive Board. Owale Edun, Finance and Coordinating Minister of the Economy from Nigeria, hopefully will be able to join us soon. And, of course, at the far end of the table, Ms. Iyabo Masha, Director of the G‑24 Secretariat. 

Without further, may I invite Mr. Recto to open with remarks.

Mr. RECTO: Thank you.

Members of the press, distinguished guests, good afternoon. Thank you for joining us at this press conference. This morning, we had the opportunity to have a productive exchange of views and experiences on some of the most pressing issues confronting the global economy today.

We are hard‑pressed on multiple fronts, with not just one but two hot wars, a trade war, mounting debt burdens, and an existential climate crisis. One thing is clear; any slowdown in the global economy is bound to hit developing countries the hardest. If we fail to take swift and corrective actions today, the developing world is on the brink of falling further behind. We are running up against time, and inaction is not an option.

While circumstances have made it more difficult to achieve a sustainable and inclusive future by 2030, we believe it remains possible with the right priorities and concerted international cooperation.

As developing countries, we acknowledge the critical need to address the underlying structural weaknesses of our economies. Therefore, we are strongly committed to prioritize inclusive growth strategies that facilitate structural transformation, sound fiscal management, and macroeconomic stability.

We believe that these measures would not only improve our economic resilience but enhance our ability to attract and leverage private and external investments as well. Access to concessional financing is of paramount importance for developing economies to mount a strong defense against these compounding challenges.

With this, we call on international financial institutions to scale up support to vulnerable countries through more innovative and responsive enhancing solutions that will help us sustained productivity, enhance long‑term growth prospects, and increase resilience to economic shocks. In particular, the ambitious replenishment, expedited disbursement, and efficient delivery of the International Development Association, or IDA21, is an urgent matter, as it serves as a critical lifeline for developing nations. But this alone will not be enough. More decisive steps are required to reinvigorate the global financial safety net and the development financing landscape. We must remember that we are all interconnected, for better or for worse.

Now, more than ever, we need to intensify multilateral cooperation to reverse headwinds and restore global stability if we are to meet our development and climate goals by 2030. All of these points are comprehensively discussed in the communiqué we have prepared for your further perusal.

With that, we are now ready to take your questions. Thank you.

Mr. DEVAHASADIN: Thank you, Mr. Chair.

Before we begin the Q&A session, let me remind you to identify yourself, your affiliation, and specify to whom on the panel your question is addressed. Your first question, please.

QUESTIONER: Firstly, I wanted to ask about the higher interest rate. The U.S. Federal Reserve seems to be delaying its decision to loosen the monetary policy. I wonder, how do you evaluate the impact for developing countries, especially G‑24? And, secondly, if you could comment on U.S. Treasury Secretary Janet Yellen's comment on the Chinese economy regarding over‑capacity, whether that would have any impact for G‑24 countries as well. Thank you.

Mr. RECTO: Well, high interest rates will definitely be a challenge for many countries in the G‑24. We all know that many of the countries, members of the G‑24 are already saddled by a lot of debt and high interest rates. So, if interest rates further go up, it will be even more challenging. Definitely, that will affect growth and the employment opportunities in our respective countries. So, for sure, it would not be good for any of us.

On the second, I did not see what Janet Yellen was speaking about, with regard to the overcapacity of China. Well, we all know that we are now‑‑that the United States, you have a trade war, the United States and China have a trade war; and because of that, inflation has increased. And because of, also, the two other wars, inflation has increased. As the world seems to be changing their supply chains, which has also brought up interest rates. So, again, that is a problem for many of our developing countries in the G‑24.

Mr. DEVAHASADIN: Thank you, Mr. Chair. The next question, Kemi, up‑front.

QUESTIONER: My question is regarding, in the past, you have talked about tax mobilization, local tax. So, I know you did not mention that right now; but is that something that you guys are still pushing forward for the G‑20 economies and the global economy?

And my other question is regarding, you mentioned the impacts on the economy we have, like in lower countries. So, if you could expand on that also.

Mr. RECTO: With regard to a global minimum tax, hopefully that would be beneficial for all countries. If the sale of a good or service, regardless of origin, was done in a particular country, at least the consumption taxes should be collected by that country. And as we have pointed out also here, that it is important to do domestic resource mobilization. It is important to have macro‑fiscal stability; and for as long as those revenues will be paid to where the sale of a particular good or service, that should be beneficial to developing countries.

Mr. DEVAHASADIN: I would like to ask Ms. Iyabo. We have an online question on the G‑24's views on negotiations at the G‑20 and OECD on digital tax economy. Would you like to respond?

Ms. MASHA: Thank you very much. Yes, indeed.

We take the issue of the reform of international tax cooperation very seriously. We have been very engaged with both the OECD process and also the United Nations process.

The latest development, of course, is that the United Nations has now commenced discussions on a new tax cooperation that will be a framework convention. So, it is in the early stages yet. There will not be much information until around August; but developing countries, like G‑24 countries, are looking forward to that process because we believe that it is going to be more inclusive. The agenda will be more democratic. And it will address the challenges that we, as developing countries, face. So that is something that we are looking forward to. Thank you.

Mr. DEVAHASADIN: Thank you. Back to the floor. Right here. And I will go to that side of the room. I see you.

QUESTIONER:  So, Ghana is one of your member states. I was wondering, you know, we have seen them continue to struggle with their creditors, despite the G‑20's Common Framework. I was wondering if you could tell us about what that says, for you, about developing country debt restructuring generally? What kind of progress you are hoping to see on that front, with Ghana specifically, but with debt restructuring more generally during this meeting this week? And what is the risk of the global financial architecture further fracturing if progress is not made? Thank you.

Mr. RECTO: Leonardo, please.

Mr. MADCUR: Thanks for the question.

I think that with regards to the debt restructuring processes, maybe from two different angles. From the financial architecture perspective, there is an ongoing process of trying to update the different elements and the different instruments.

By the way, the IMF is undergoing a review of the policy. And as much as it can be told, there is an update also on the lending into arrears and the ‑‑ more in general, the general access, in order to accommodate the needs of those countries going under the restructuring process to speed up the process and also to improve the access to last‑resort lenders to those countries.

Now, it is something that is going to be ‑‑ of course, it is going to take some time. But the importance here is that we try to improve the ‑‑ not only the Common Framework but also how the official creditors kind of line up and actually help those countries get away from those protracted situations.

Mr. DEVAHASADIN: Before we move on, I would like to acknowledge Mr. Ben Akabueze.

Ms. MASHA: Representative. Thank you for joining us today. 

Mr. AKABUEZE: Thank you. My pleasure.

Mr. DEVAHASADIN: Next question, the gentleman in front. And maybe we can another one, from the lady in red.

QUESTIONER: My two questions are about Pakistan, primarily, and related to‑‑of course, Pakistan is a member of the G‑24. About the debt burden, Pakistan is one of the hard‑hitting countries for the climate change, as well, if you look into that part. And secondly, about the debt restructuring.

So how exactly the G‑24 is pushing back towards Fund and how the Fund is collaborating? Is there any kind of amount being calculated which is somehow going to help G‑24 members about the climate change? And about the debt restructuring, is G‑24 collectively pursuing it with the Fund or financial institutions, to bail some countries out in this situation?

Mr. RECTO: Masha, please respond.

Ms. MASHA: Yes, please.

Well, indeed, Pakistan is one of the most indebted countries. What we have put before the leadership of the Bretton Woods Institution institutions is, one, to have the facilities that provide liquidity at affordable costs and also the facilities that provide long‑term financing.

As my colleague said, there are still a lot of discussions going on. And what we are hearing is that the leadership of both the IMF and the World Bank are also concerned about the high debt burden that many countries face. So, I believe it is something that will be addressed in their own agenda over the next year or so. But, they are aware of that.

On climate financing, the good thing is that the new instrument that came out of COP28, the Loss and Damage Fund, it appears to be progressing very well. And the World Bank has been charged with the responsibility of designing its fiduciary structure. And they actually have that in their program, in the evolution program, as something they plan to do.

Now, our main concern, as developing countries, is that because of the commitment that the World Bank gave, that they were going to spend 45 percent on climate‑related issues, we did caution ‑‑ as much as we welcome that, we also do not want the World Bank to forget about some of the developmental challenges that really magnify extreme poverty. So that is where we are on that discussion.

Mr. DEVAHASADIN: Thank you. The lady in red, please.

QUESTIONER: This is Paula Escalada as from EFE. I would like to know which countries participated today in the meeting. I would like to know also if Iran was present. And if you reached any agreement or are you going to publish any communiqué? Thank you.

Mr. RECTO: On the third, yes, we do have a communiqué. On who were present?

Ms. MASHA: It is all the member countries, all the G‑24 member countries were represented.

Mr. RECTO: Including Iran.

Mr. DEVAHASADIN: Yes. And the communiqué will be available after this press conference.

I have an online question. This is going to be addressing you, Mr. Madcur. A question from AFP:

Do you plan to request an extension of credit from the IMF to get out of the exchange rate trap? President Javier Milei said, with the additional US$15 billion, he could eliminate the exchange rate restrictions. Would you like to take that question?

Mr. MADCUR: I am just going to say that if we can‑‑

Because we are talking about the G‑24. So, I would like not to monopolize the discussions around Argentina, which I know it is tempting to discuss about Argentina. But I would only say that the authorities are coming. And we are in ongoing daily discussions with the staff of the IMF with regards to Argentina's program. Thanks.

Mr. DEVAHASADIN: Thank you. Please, the lady in pink and then to you.

QUESTIONER: Thank you for taking my question. Gaitty Anis from Aik News of Pakistan.

So according to the economic outlook that I mentioned today, it projects that there will be an uptick in the economic growth in Pakistan next year. And inflation has been said to be 7 percent and‑‑

Debt is to be said‑‑it is 7 percent, low. So is this part of some structural reform on Pakistan's part? Or is there some emergency [cost mitigant] between this on the part of the Pakistan's government?

Mr. RECTO: Are you familiar with Pakistan?

Ms. MASHA: I'm not really.

First, Pakistan is coming from a low base. So if the growths are projected to be high, that also reflects the low base. But it is not something that we want to discuss in isolation because we look at countries more generally.

Mr. DEVAHASADIN: Thank you. The reporter from Nigeria, please.

QUESTION: Thank you very much. My name is Hope Moses from BusinessDay, Nigeria.

In your presentation, you called for international financial institutions to support the vulnerable countries. So, I want to know, what kind of support are you advocating for Nigeria, considering the rising public debt in the country? Thank you.

Mr. RECTO: Would you like to respond to that for Nigeria?

Mr. AKABUEZE: Thank you. I think that for Nigeria, we are faced with [above] fiscal challenges, but the most significant being‑‑getting debt sustainable, getting increased fiscal‑‑increasing‑‑at the same time, increasing fiscal space for the ever‑increasing burden of public expenditure, especially with sustained, relatively high population growth.

So, the most important sort of support that Nigeria requires at this time is investment and increased trade. So, while ODA is helpful, at the end of the day, that is not what is going to really sustainably address the scale of Nigeria's problems. There is a lot of investment opportunities, especially in areas like infrastructure. Infrastructure we have ‑‑ I think it is public ‑‑ for instance, the power sector is [inaudible]. So that is the‑‑

But at the same time, of course, concessional debt support still remains important for the country, especially foreign currency denominated. For one, it helps also with addressing the foreign currency supply situation that had put pressure on the exchange rate. You can see inflation is high. Inflation is being tackled. We see inflation beginning to basically peak. And we see a reversing trend towards the‑‑in the second half of this year, the exchange rate has stabilized now. We have seen basically the [pile on]‑‑the official foreign exchange market rates merge. And I think that all of these are inspiring greater confidence with the investors, whether that be portfolio investors or foreign direct investors and even with domestic investors as well.

Mr. DEVAHASADIN: Do you want to come in, Masha?

Ms. MASHA: No.

Mr. DEVAHASADIN: Before we go back to the last question from to the floor, I have a question online from Zulfick Farzan from News 1st Sri Lanka:

Was Sri Lanka's debt crisis and the Common Framework discussed at the G‑24 meeting?

Mr. RECTO: Masha?

Ms. MASHA: Well, we did discuss the Common Framework generally. And the position of the G‑24 is that based on the latest resolutions that we have seen in Ghana and that is also taking place in Zambia, we think that there has been some progress on the Common Framework.

For Sri Lanka, they have a different problem because it is a middle‑income country, so it does not really qualify for the Common Framework. But we did call on the global leadership, the IMF and World Bank, to look into strengthening the Common Framework in certain areas. One is to be able to deliver a very fast and predictable resolution to countries because it took a very long time for countries to get some kind of resolution. And during that time, they were falling into debt.

We also asked for some engagements with the credit rating agencies because we have the case of Ghana, for example, where they were in the middle of trying to get some support; but because a negative credit rating downgrade came up, then that stopped all the support they could have gotten. So, it may not have been necessary for such a country to go into debt resolution if the credit rating agencies were cooperative.

So those are the main issues that we highlighted as far as the Common Framework is concerned.

Mr. DEVAHASADIN: Any last question from the floor before we close?

Well, then, we are at time. Well, thank you very much for joining the press conference here and online as well.

The G‑24 communiqué, along with the transcription of this press conference, will be posted online later. And we also have a press release available as well.

Thank you very much, panelists. Thank you very much, reporters and journalists here. Have a good rest of your day. Thank you.