Transcript of G24 October 22 Press Briefing

IMF News, October 22, 2024

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Global economy: "shows signs of stabilization" but "the outlook for many vulnerable nations, particularly in the global south, remains bleak."
Key risks highlighted: conflicts and humanitarian crises; rising geopolitical tensions; threat of commodity price spikes; elevated interest rates; impaired capital flows and fiscal stability.
Developmental target: sustainable and inclusive future by 2030 remains possible "with the right priorities and concerted international cooperation."
Institutional call: "a more agile and strong will IMF and World Bank" and "heightened development cooperation, scale‑up support, and innovative solutions."

1) "The IMF must create a new mechanism to support countries with sound fundamentals during liquidity crisis."
2) "The World Bank needs more ambitious goals for its concessional and non‑concessional windows" to help "eradicating poverty on a livable planet" and achieve inclusive and sustainable development by 2030.
3) Reform the sovereign debt resolution framework to deliver "comprehensive, predictable, swift, and impactful debt relief" for vulnerable economies.
4) "Accelerate governance and institutional reforms of the Bretton Woods Institutions, to increase the voice and representation of developing nations."

Growth and fiscal targets:
- "At the second quarter grew by roughly 6.3 percent."
- "For the first 2 years of this administration, we have grown about 6 percent."
- Current debt level: "Today are roughly at 60 percent."
- Target debt: "We expect the good debt‑to‑GDP to be way below 60 percent by 2028."
Expenditure and composition:
- "Spending roughly 5 to 6 percent on infrastructure, maybe a similar amount also for human resource development, particularly in health and education."
- "70 percent of the economy is household consumption."
External and sectoral figures:
- Business process outsourcing (BPO) revenues: "we collect roughly 35 billion in revenues a year."
- Remittances: "a robust remittance of roughly the same amount, about $35 billion a year as well."
Technology risk: AI is "a challenge" but "the BPO industry is already adapting to AI."

Liquidity and FX constraints:
- Liquidity constraints, especially foreign exchange, impair debt servicing (foreign and domestic).
- Key remedy: increase oil production to raise foreign exchange supply and reduce pressure on the naira when large flows occur.
Monetary policy and inflation:
- With double‑digit inflation, the Central Bank of Nigeria is "continuing with monetary tightening."
- On single‑digit interest rates: acknowledged as unlikely in the near term given current inflation and hawkish monetary policy stance.
Structural reform guidance:
- Reforms should be accompanied by social safety nets to cope with frontloaded costs and spikes in cost‑of‑living.
- Clear communication and transparency (e.g., published dashboards for direct transfers) are critical to build public trust.
Engagement with multilateral support:
- The IMF can provide "bridge financing" for countries with sound fundamentals to allow time for adjustment.

G‑24 view: need for emerging market and developing economies to "put their economies in the right place" and access liquidity from international financial organizations.
On the vetoed education financing bill: described as an effort to "keep the budget where it has to be" and "evaluating costs and expenditure in the right way," not as cutting education.

Concern: Common Framework currently applies only to low‑income countries.
G‑24 proposal: a forum where middle‑income countries can negotiate with creditors—reference to "Sovereign Debt Resolution Roundtable" but emphasizing need for a mechanism that delivers timely, comprehensive debt reduction for both middle and low‑income countries.
Aim: "very timely, very comprehensive reduction in debt" so countries like Sri Lanka, Lebanon, and others can benefit.

Risk of rising protectionism and reversal of globalization; concern about setback for multilateralism and trade.
G‑24 call: strengthen the WTO as "the center of trade discussions" and for "the World Bank and the IMF to rise up to a much more multilaterally‑engaged organization."
Specific regional note: African Growth and Opportunity Act cited as unlikely to be affected by U.S. election outcomes.

Consensus: current MDB financing is "not commensurate with the level of ambition" needed to tackle climate change.
Developing‑country perspective:
- Need to respect emerging markets' "right to develop first" and ensure financing for development priorities not directly linked to climate mitigation.
- For fossil‑fuel‑endowed developing countries (e.g., Nigeria), a "realistic approach" is required to use resources to industrialize while meeting Paris Accord commitments.

Global inflation outlook noted: "for next year, the global inflation rate will still be relatively high, lower than this year, but something like 5.8 percent, thereabouts."
Policy implication: elevated interest rates will remain a concern for developing countries; G‑24 calls for lower cost of borrowing from the World Bank and larger concessional financing (e.g., IDA).
IMF policy change cited: "The IMF has reduced their charges. 36 percent reduction in the rates and the excess charges."
Timeline for Bretton Woods reforms: consultations underway; minimum expectation of an update "by next Spring Meeting" and possible final decisions by the Annual Meetings, with subsequent board ratification required.

For structural reform programs:
- Design and fund social safety nets proactively to protect the poor and vulnerable from frontloaded costs.
- Prioritize transparent communication of reform steps, timing, and beneficiary delivery (e.g., dashboards).
For international institutions:
- Create liquidity support mechanisms for countries with sound fundamentals facing crises.
- Expand concessional and non‑concessional World Bank windows to match development and climate challenges.
- Reform sovereign debt resolution frameworks to be comprehensive and inclusive of middle‑income countries.
- Accelerate governance reform to increase developing country voice and representation.

Source: Transcript of G24 October 22 Press Briefing, October 22, 2024, IMF Communications Department.