{
  "title": "Overcoming Divides and Removing Obstacles to Recovery",
  "publication": "IMF News, October 5, 2021",
  "sourceUrl": "https://www.imf.org/en/news/articles/2021/10/05/sp100521-md-curtain-raiser-overcoming-divides-and-removing-obstacles-to-recovery",
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  "summary": "Thank you for the warm welcome. I am grateful to Bocconi University and the global think tank community for inviting me to this important G20 event. And I am delighted to join Mario and Paolo for our discussion today.",
  "authors": [
    "Kristalina Georgieva"
  ],
  "publishDate": "2021-10-05",
  "sections": [
    {
      "heading": "Introduction",
      "content": "- Context: Remarks by Kristalina Georgieva, IMF Managing Director, at a G20 event hosted by Bocconi University and T20/ISPI on October 5, 2021.\n- Core framing: global recovery remains “hobbled” by the pandemic—“like walking with stones in our shoes”.\n- Immediate obstacle highlighted: the “Great Vaccination Divide”—too many countries with too little access to vaccines.\n- Broader divide: differences in countries’ ability to support recovery and to invest for the future."
    },
    {
      "heading": "Global Outlook: Divergence, Inflation, and Debt",
      "content": "- Global growth:\n  - July projection: global growth at 6 percent in 2021.\n  - Updated World Economic Outlook (forthcoming at the time): growth expected to moderate slightly in 2021.\n  - Projection: economic output in advanced economies is projected to return to pre-pandemic trends by 2022; most emerging and developing countries will take many more years to recover.\n- Divergence:\n  - United States and China remain vital engines of growth, though momentum is slowing.\n  - Some advanced and emerging economies (including Italy and Europe broadly) gaining momentum.\n  - Many other countries face worsening growth due to low vaccine access and constrained policy response—risk of persistent divergence and long-term scarring (job losses affecting young people, women, and informal workers).\n- Inflation:\n  - Headline inflation rates have increased rapidly in a number of countries, with uneven effects.\n  - Expectation: price pressures to subside in most countries in 2022, but in some emerging and developing economies price pressures are expected to persist.\n  - Global food prices: up by more than 30 percent over the past year.\n  - Risk: sustained rise in inflation expectations could cause rapid rise in interest rates and sharp tightening of financial conditions, posing a particular challenge to emerging and developing economies with high debt levels.\n- Debt:\n  - IMF estimate: global public debt has increased to almost 100 percent of GDP (global public debt by end-2020).\n  - Many developing countries started the pandemic with little fiscal firepower and now face tighter budgets and limited ability to issue new debt at favorable terms—described as the fiscal financing divide."
    },
    {
      "heading": "Strong Policy Action — Vaccinate, Calibrate, Accelerate",
      "content": "- Overarching prescription: vaccinate, calibrate, and accelerate.\n- Vaccinate:\n  - Targets endorsed with World Bank, WHO, WTO: vaccinate at least 40 percent of people in every country by the end of this year, and 70 percent by the first half of 2022.\n  - Immediate needs:\n    - Sharply increase delivery of doses to the developing world; richer nations must deliver on donation pledges immediately.\n    - Boost vaccine production and distribution capabilities; remove trade restrictions on medical materials.\n    - Close a $20 billion gap in grant financing for testing, tracing, and therapeutics.\n  - Risk quantified: If large parts of the world remain unvaccinated (the “endemic scenario”), global GDP losses could rise to $5.3 trillion over the next five years.\n- Calibrate:\n  - Monetary policy guidance:\n    - Central banks can generally look through transitory inflation pressures but should be prepared to act quickly if recovery strengthens faster than expected or if inflation expectations rise.\n    - Some countries already facing rising inflation expectations and more persistent price pressures have had to tighten.\n  - Financial risks: monitor stretched asset valuations and varied country exposures.\n  - Fiscal policy guidance:\n    - Tailor fiscal measures to country circumstances; longer pandemic increases fiscal constraints and forces tradeoffs between lifelines, near-term support, and long-term structural goals.\n    - Low-income countries need more revenue mobilization, more concessional financing, and more help with debt problems.\n    - Governments need sound medium-term frameworks to balance current support and debt reduction to build credibility with citizens and markets.\n- Accelerate (structural priorities):\n  - Three priority issues for economic and financial stability: climate change, technological change, and inclusion.\n  - Climate change:\n    - Call for a robust price on carbon and substantial scaling-up of green investment over the next two decades, with support for the most vulnerable.\n    - Potential economic impact: with appropriate supply policies, global GDP could be raised by about 2 percent this decade, and create 30 million new jobs.\n    - Private finance role: requires stronger global efforts to improve data, disclosures, and taxonomies.\n  - Digital transformation:\n    - Scale up digital infrastructure investment and invest in education, health, and basic research to raise productivity and inclusion.\n    - Example: a new pilot scheme shows that central bank digital currencies can reduce the time needed for cross-border payments to seconds and sharply cut costs.\n  - Tax policy:\n    - Need for fairer and more efficient tax systems.\n    - Completing agreement on global minimum corporate tax is vital to mobilize revenue for transformative investments.\n  - International monetary system:\n    - Work together so the transformation benefits all."
    },
    {
      "heading": "IMF Actions and Financing Measures",
      "content": "- IMF support provided:\n  - $118 billion in new financing to 87 countries and debt service relief for poorest members.\n  - New allocation of Special Drawing Rights (SDRs) of $650 billion in August (largest issuance in IMF history).\n    - About $275 billion of the allocation went to emerging and developing countries.\n  - Immediate benefits: countries holding new SDRs as part of official reserves can boost confidence and lower borrowing costs; some are using or planning to use SDRs for priority needs (examples cited: Nepal for vaccine imports; North Macedonia for health spending and pandemic lifelines; Senegal to boost vaccine production capacity; Haiti to help finance vital imports).\n- Proposals to magnify SDR impact:\n  - Call on countries with strong external positions to voluntarily channel their SDRs to where they are most needed.\n  - Options include:\n    - Channeling new SDRs into the Poverty Reduction and Growth Trust to increase zero-interest loans to low-income countries.\n    - Using SDRs to create a new Resilience and Sustainability Trust to help low-income and vulnerable middle-income countries achieve sustainable and prosperous futures.\n  - Rationale: making the most of SDRs is good for the global recovery, good for countries, and good for people."
    },
    {
      "heading": "Conclusion",
      "content": "- Personal reflection: concern for the world future generations will inherit; optimism drawn from student energy and collective learning from the crisis.\n- Call to action: use clarity of thought and lessons from the past 18 months to remove the “stones” from our shoes and walk forward to a better future for all.\n\nSource: Overcoming Divides and Removing Obstacles to Recovery — Speech by Kristalina Georgieva, IMF Managing Director, October 5, 2021.\n\n---\n\n Content in this bundle\n\n- Staff Paper\n  - Staff Paper (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - Staff Paper (PDF){rel=\"external\" type=\"application/pdf\"}\n- Staff Paper\n  - Staff Paper (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - Staff Paper (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\n References\n\n- https://www.imf.org/en/about/senior-officials/bios/kristalina-georgieva\n- Republic of North Macedonia and the IMF\n- United States and the IMF\n- Speeches\n- PRESS CENTER\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2021/10/05/sp100521-md-curtain-raiser-overcoming-divides-and-removing-obstacles-to-recovery"
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    "Authors: Kristalina Georgieva",
    "Published: October 5, 2021",
    "Context: Remarks by Kristalina Georgieva, IMF Managing Director, at a G20 event hosted by Bocconi University and T20/ISPI on October 5, 2021.",
    "Core framing: global recovery remains “hobbled” by the pandemic—“like walking with stones in our shoes”.",
    "Immediate obstacle highlighted: the “Great Vaccination Divide”—too many countries with too little access to vaccines.",
    "Broader divide: differences in countries’ ability to support recovery and to invest for the future.",
    "Global growth:",
    "Divergence:",
    "Inflation:",
    "Debt:",
    "Overarching prescription: vaccinate, calibrate, and accelerate.",
    "Vaccinate:",
    "Calibrate:",
    "Accelerate (structural priorities):",
    "IMF support provided:",
    "Proposals to magnify SDR impact:",
    "Personal reflection: concern for the world future generations will inherit; optimism drawn from student energy and collective learning from the crisis.",
    "Call to action: use clarity of thought and lessons from the past 18 months to remove the “stones” from our shoes and walk forward to a better future for all.",
    "**Staff Paper**",
    "**Staff Paper**",
    "[https://www.imf.org/en/about/senior-officials/bios/kristalina-georgieva](https://www.imf.org/en/about/senior-officials/bios/kristalina-georgieva)",
    "[Republic of North Macedonia and the IMF](http://www.imf.org/external/country/MKD/index.htm)",
    "[United States and the IMF](http://www.imf.org/external/country/USA/index.htm)",
    "[Speeches](https://www.imf.org/en/news/searchnews)",
    "[PRESS CENTER](http://presscenter.imf.org/)",
    "[https://www.imf.org/en/home](https://www.imf.org/en/home)"
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