Joint Press Conference by IMF Managing Director Kristalina Georgieva and IMFC Chair Magdalena Andersson

IMF News, January 19, 2021

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Published: January 19, 2021

Context and opening remarks

Magdalena Andersson begins her tenure as Chair of the International Monetary and Financial Committee (IMFC), succeeding Lesetja Kganyago.
Andersson emphasizes the IMF as the hub of global economic cooperation and the IMFC's advisory role to the Fund and its 190 member countries.
The pandemic is described as a historic challenge to public health and the global economy; the IMF responded quickly with crisis support through 2020.

State of the global economy and human impact

Global growth for 2020 was revised from "more than 3 percent" forecasted a year ago to -4.4 percent in the IMF's latest forecast.
The recovery is expected to be gradual and uneven, with long-lasting scars for years.
Extreme poverty setback: "In 2020, the number of people living in extreme poverty is estimated to have increased by up to 115 million people."
Vaccine rollout is a decisive determinant of the recovery; faster vaccination yields large economic benefits.

Fiscal policy: past response and guidance going forward

Extraordinary fiscal support was the right response to protect lives and livelihoods and to avert deeper economic collapse.
Key lessons:
- Support should not be withdrawn too early.
- Fiscal support must be temporary and restored when circumstances allow to ensure preparedness for future crises.
- Recovery-phase policies should be "smart and effective" and aim to rebuild economies greener, more inclusive, and more digital.
Andersson’s fiscal framing: the IMF must be "Accurate, Agile, and All inclusive."

IMF financing, lending, and resource constraints

IMF pandemic financing approved: "US$103 billion total financing has been approved since the start of the pandemic, covering 83 countries."
Of those 83 countries, "49 of these countries are lower income countries."
Use of existing SDRs in 2020: "Some $20 billion of existing SDRs were provided to the IMF to then lend to low income countries at nominal terms."
Georgieva notes the need to expand concessional capacity and liquidity; a new SDR allocation "can be very helpful."
On alternative financing options: gold sales are a membership matter; gold contributes to IMF financial strength and a sale has opportunity costs.
Debt service suspension: Fund staff favored a one-year extension in October; membership chose six months. The question of further extension into April will be revisited and pressure to extend "six more months will be still there."

Inequality, inclusion, and policy priorities

COVID-19 is likely to increase inequality within and between countries; disproportionate impacts fall on low-skilled workers, the young, and women.
Priority policy directions:
- Protect vulnerable groups during the crisis.
- Target support to the most affected workers and sectors.
- Design recovery reforms to address long-term challenges: climate crisis, growing inequalities, digital transformation.
- Promote income equality and gender equality as both moral objectives and "smart economics."

Recovery objectives and macro policy mix

Georgieva highlights three IMF priorities:

1. Pursue an exit from the health and economic crisis via international cooperation on vaccine delivery and continued monetary and fiscal support until the health crisis is under control. 2. Pursue a transformative recovery that is "inclusive, green, smart" driven by good policies. 3. Address uneven recovery and divergence between rich and poor countries by generating more resources and helping countries reduce high levels of debt.

Country-level fiscal support observed:
- "Advanced economies have been able to provide, on average, 20 percent of GDP in terms of support measures, emerging markets, six-percent, low-income countries, two-percent."

Estimated global output benefit from collective vaccine delivery: "$9 trillion more in global output between now and 2025 if we press on collective action in the delivery of vaccines everywhere."

Regional focus — Africa and Sudan

Africa in 2020 shrunk "for the first time since majority of African countries obtained their independence."
Growth forecasts cited: global economy "to grow over 5 percent" in 2021; "the African economies to grow 3 percent."
Andersson and Georgieva stress the need to stand by Africa to avoid losing development gains; Africa requires expanded access to financing, domestic resource mobilization, and policy support to enable higher sustained growth rates.
Sudan: IMF staff engaged with Sudan under a staff-monitored program (SMP) to build preconditions for debt relief and HIPC eligibility. A Board discussion occurred; an assessment is expected in March to advance prospects for debt relief and reintegration with the international community.

Key statistics and exact figures cited

IMF membership count: "190 member countries."
IMFC history: Andersson is the first woman to lead the IMFC in "76 years of history at the IMF."
IMF pandemic financing: "US$103 billion" approved, covering "83 countries"; "49" of them are lower income countries.
SDRs used in 2020 for IMF lending: "Some $20 billion."
Country fiscal support averages: "20 percent of GDP" (advanced economies), "six-percent" (emerging markets), "two-percent" (low-income countries).
Potential global output gain from equitable vaccine delivery: "$9 trillion" between now and 2025.
Sweden and IMF membership: "70 years of membership with Sweden at the IMF."
Sweden's lending capacity contribution cited: "$1 trillion" lending capacity at the Fund via arrangements to borrow.
Extreme poverty increase estimate in 2020: "up to 115 million people."
IMF suggested tax performance concern: tax-to-GDP "below 15 percent" seen as a constraint on public investment and services.

Policy recommendations and actions for the IMF and membership

Maintain crisis support until the health crisis is truly behind us; avoid premature withdrawal of fiscal measures.
Calibrate fiscal support to the state of the health crisis and target support to the most vulnerable.
Prepare for fiscal consolidation once recovery is secured to restore public finances and resilience to future shocks.
Use recovery spending to accelerate green, inclusive, and digital transitions—create jobs while addressing climate and inequality.
Expand concessional financing capacity (including consideration of a new SDR allocation) to support low-income and vulnerable countries.
Consider membership-led options for additional resources, including debates over SDR allocation and potential gold sales (membership decisions).
Continue and potentially extend debt service relief initiatives while advancing debt treatment frameworks (e.g., HIPC) for eligible countries.
Strengthen domestic resource mobilization—improve tax policy and tax administration, especially where tax-to-GDP is low.

Joint Press Conference by IMF Managing Director Kristalina Georgieva and IMFC Chair Magdalena Andersson, January 19, 2021