Policy Priorities for the G20: One Earth One Family One Future

IMF Blog, February 22, 2023

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Global growth slowing to 2.9 percent this year.
Modest rebound to 3.1 percent in 2024.
Emerging market and developing economies expected to account for about four-fifths of global growth this year.
India alone expected to contribute more than 15 percent.
Inflation has been high but is declining; bringing inflation back to target remains imperative.

After three years of shocks, too many economies and people are still hurting.
Around the world many households struggle with the high cost of living; millions cannot afford fuel for heating or cooking.
A record 349 million people in 79 countries face acutefood insecurity.
Fiscal policy guidance:
- Fiscal measures should be temporary and laser-focused on protecting those most in need.
- In most countries, targeted measures need to be coupled with gradual fiscal tightening to rebuild buffers and ensure debt sustainability.
- Align fiscal and monetary policies; clear communication of policy goals to avoid sudden repricing in financial markets.
Monetary policy guidance:
- Policymakers need to stay the course on monetary tightening to restore price stability.
- Be mindful of adverse spillovers to emerging and developing economies (stronger US dollar, capital outflows).

About 15 percent of low-income countries are in debt distress.
An additional 45 percent of low-income countries are at high risk of debt distress.
Among emerging economies, about 25 percent are at high risk and facing “default-like” borrowing spreads.
Progress and gaps:
- Under the G20’s Common Framework, Chad reached an agreement with its creditors at the end of last year; Zambia and Ghana are progressing toward debt resolution.
- Ground rules need to be clarified and processes made more efficient and effective.
Initiative:
- The IMF, World Bank, and India’s G20 presidency are convening a new Global Sovereign Debt Roundtable to bring creditors and debtor countries together, assess shortcomings, and accelerate debt restructuring.

IMF support since the pandemic:
- Over $272 billion for 94 countries.
- About $34 billion was fast-disbursing emergency financing.
- Historic SDR allocation of $650 billion to boost members’ reserves.
- A new Food Shock Window provides fast access to resources for countries hit hardest by the food security crisis.
Calls to action:
- Stand as one with low-income and vulnerable members to ensure access to concessional IMF financing in times of distress.
- Members with capacity should address fundraising shortfalls—especially for subsidy resources in the Poverty Reduction and Growth Trust—and deliver additional contributions to the new Resilience and Sustainability Trust.
- Advance the 16th General Review of Quotas and complete it by the end of the year.

Climate is an existential threat requiring collective action.
Policy levers to redirect finance toward green projects:
- Smarter regulation, price signals, and well targeted subsidies to incentivize low-carbon investment.
- Financial innovations that mobilize more private capital.
IMF role:
- Advice and financial support to mitigate climate-related risks to economic and financial stability.
- The first wave of pilot countries accessing the Resilience and Sustainability Trust demonstrates support for vulnerable countries to set up policies conducive to climate-friendly investments.
- Coordination with multilateral development banks and the private sector to reduce investment risks.
Guidance on green subsidies and trade:
- Green subsidies for early-stage technologies can be helpful (example: they lowered the global price of solar energy) but must be carefully designed to avoid wasteful spending or trade tensions.
- Avoid sliding into protectionism that would make it harder for poorer countries to access new technologies.

Digital technologies can promote inclusion, transparency, and revenue/compliance gains.
Examples:
- India’s Unified Payments Interface processed over 8 billion transactions in one month.
- The system allows 400 million people in rural areas to participate with legacy ‘push-button’ cellphones.
CBDCs:
- Most IMF member countries are now actively evaluating central bank digital currencies (CBDCs).
- CBDCs could bring substantial benefits, such as more resilient payments in disaster-prone countries and greater financial inclusion.
- India has conducted an in-depth assessment of CBDCs that could inform similar studies elsewhere.
Risks and regulatory needs:
- Recent collapses of prominent crypto exchanges heightened concerns about market integrity and user protection.
- Need to strengthen financial regulation and develop global standards that apply evenly across borders.
- IMF work on crypto assets is particularly focused on macro-financial policies.
Capacity development:
- IMF capacity development aims to be a transmission line of best practice across the membership.

Solidarity across countries is essential—support vulnerable people and economies, protect the planet, and harness digital progress for all.
Avoid zero-sum and protectionist policies that make the world poorer and less secure.
Find common ground despite rising geopolitical tensions.
Take courageous, coordinated actions to steer global recovery and resilience.

Source: Kristalina Georgieva, Policy Priorities for the G20: One Earth, One Family, One Future, February 22, 2023.