{
  "title": "Facing Crisis Upon Crisis: How the World Can Respond",
  "publication": "IMF News, April 14, 2022",
  "sourceUrl": "https://www.imf.org/en/news/articles/2022/04/14/sp041422-curtain-raiser-sm2022",
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  "summary": "Spring Meetings 2022 Curtain Raiser: Facing Crisis Upon Crisis: How the World Can Respond, By Kristalina Georgieva, IMF Managing Director",
  "authors": [
    "Kristalina Georgieva"
  ],
  "publishDate": "2022-04-14",
  "sections": [
    {
      "heading": "Introduction",
      "content": "- Speaker: Kristalina Georgieva, IMF Managing Director.\n- Location and date: Washington, DC, April 14, 2022.\n- Core framing: The world faces a crisis on top of a crisis—first the pandemic, and now Russia’s invasion of Ukraine—compounded by a growing risk of fragmentation of the world economy into geopolitical blocs.\n- Human impact highlighted:\n  - Over 11 million displaced people from Ukraine.\n  - The war is hitting the world’s most vulnerable people hardest, exacerbating existing struggles from lower incomes and higher energy and food prices.\n- Key systemic risk: Fragmentation into different trade and technology standards, payment systems, and reserve currencies would incur painful adjustment costs, with poor countries and poor people bearing the brunt."
    },
    {
      "heading": "Bigger Challenges, More Difficult Choices",
      "content": "- Pre-war and pandemic context:\n  - In January, the IMF cut its global growth forecast to 4.4 percent for 2022.\n  - Since then, the outlook deteriorated substantially due to the war, inflation, financial tightening, and frequent, wide-ranging lockdowns in China.\n  - IMF will be projecting a further downgrade in global growth for both 2022 and 2023.\n- Scope of impact:\n  - The impact of the war will contribute to forecast downgrades for 143 economies this year—accounting for 86 percent of global GDP.\n  - Prospects vary greatly across countries: catastrophic economic losses in Ukraine; a severe contraction in Russia; spillovers via commodity, trade, and financial channels for many others.\n- Commodity and inflation effects:\n  - Before the war, Russia and Ukraine provided 28 percent of global wheat exports.\n  - Russia and Belarus supplied 40 percent of exports of potash.\n  - Grain and corn prices are soaring; food insecurity is a grave concern.\n  - For advanced economies, inflation is reaching a four-decade high and is now projected to remain elevated for longer than previously estimated.\n- Medium-term and distributional consequences:\n  - Output for most countries is now expected to take even longer to return to its pre-pandemic trend.\n  - Most emerging and developing countries face scarring from the pandemic, including job losses and learning losses—costs borne mostly by women and young people.\n- Elevated uncertainty: The outlook is extraordinarily uncertain—beyond normal range—with risks that the war and sanctions could escalate, new Covid variants could emerge, and crops could fail.\n- Policy dilemma posed succinctly: How can policymakers rein in high inflation and rising debt, while maintaining critical spending and building foundations for durable growth?"
    },
    {
      "heading": "Policy Action to Safeguard the Recovery and Build Resilience",
      "content": "- Immediate priorities (enumerated):\n  - End the war in Ukraine.\n  - Confront the pandemic.\n  - Tackle inflation and debt.\n- End the war / support Ukraine and neighbors:\n  - IMF emergency financing to Ukraine: $1.4 billion to help meet immediate spending needs.\n  - IMF launched a special account to provide a secure way to deliver further funding to Ukraine.\n  - Preparations underway, with international partners, for massive reconstruction efforts.\n  - Support to neighbors: example—Moldova, a country of just 2.6 million people which has already welcomed over 400,000 refugees.\n  - IMF is stepping up support for the 20 percent of our member countries experiencing fragility or conflict.\n- Confront Covid:\n  - IMF staff and partners’ recent analysis: a comprehensive toolkit (vaccines, testing, anti-viral treatments) can be deployed for a modest $15 billion this year, and $10 billion each year thereafter.\n  - Principle: health security is economic security.\n- Tackle inflation:\n  - Central banks should act decisively, monitor the economy closely, adjust policy appropriately, and communicate clearly.\n  - Emerging and developing economies face added risk from spillovers of monetary tightening in advanced economies, including higher borrowing costs and risk of capital outflows.\n  - Country-level tools recommended include extending debt maturities, exchange rate flexibility, foreign exchange interventions, and capital flow management measures—aligned with the Fund’s recently updated institutional view.\n  - International efforts needed to help economies move safely through the monetary tightening cycle.\n  - Liquidity importance:\n    - IMF lending—currently over $300 billion.\n    - Last summer’s $650 billion SDR allocation.\n    - Low-income countries are using up to 40 percent of their SDRs on Covid-related priorities, like vaccines and other essential spending.\n- Address debt:\n  - Spending must be carefully prioritized—on safety nets, health, and education—and targeted to the most vulnerable.\n  - A credible medium-term fiscal path, including equitable tax policies, is key to preserving debt sustainability while delivering support.\n  - For many countries—especially among the 60 percent of low-income nations already in or near debt distress—debt restructuring will be required.\n  - The G-20’s Common Framework for debt treatment must be improved with clear procedures and timelines for debtors and creditors, and expanded to other highly-indebted vulnerable countries that can benefit from creditor coordination.\n  - Timely and orderly debt resolution is in the interest of both debtors and creditors.\n- Structural transformations to seize:\n  - Green transition:\n    - Actions required: carbon pricing, investment in renewables, and compensation/new opportunities for those adversely affected by the green transition.\n    - These measures can bolster energy security.\n    - IMF action: creation of a new Resilience and Sustainability Trust to provide affordable longer-term funding and catalyze private investment to address macro-critical challenges such as climate change—and future pandemics.\n  - Digital revolution:\n    - Priorities: reskilling workers, unlocking innovations such as central bank digital currencies, and strengthening regulatory frameworks around crypto-assets.\n    - Over 100 of our member countries are actively investigating this area; the IMF is assisting with policy advice and capacity building.\n    - The digital future is presented as delivering new sources of productivity, growth, and jobs."
    },
    {
      "heading": "Conclusion: Indivisible",
      "content": "- Synthesis of risks: In seven weeks the world experienced a second major crisis—a war on top of a pandemic—risking erosion of progress made recovering from Covid, and threatened further by fragmentation into geopolitical and economic blocs.\n- Interconnected consequences stressed: war in Europe can create hunger in Africa; pandemics and emissions are global in impact.\n- Core prescription: The only effective remedy is international cooperation; efforts to solve global challenges must be indivisible.\n- Institutional role: With near universal membership, the IMF positions itself as a tried and tested platform for global collaboration, providing policy advice and financing to those hardest hit.\n- Historical resonance: Quote from Bretton Woods context—U.S. Treasury Secretary Henry Morgenthau’s “elementary economic axiom”: “Prosperity, like peace, is indivisible.”\n- Closing: The challenges are indivisible; so must be our efforts to solve them. Thank you.\n\nSource: Speech by Kristalina Georgieva, “Facing Crisis Upon Crisis: How the World Can Respond,” Washington, DC, April 14, 2022.\n\n---\n\n\n References\n\n- https://www.imf.org/en/about/senior-officials/bios/kristalina-georgieva\n- Russian Federation and the IMF\n- Ukraine and the IMF\n- Speeches\n- PRESS CENTER\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2022/04/14/sp041422-curtain-raiser-sm2022"
    }
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    "Authors: Kristalina Georgieva",
    "Published: April 14, 2022",
    "Speaker: Kristalina Georgieva, IMF Managing Director.",
    "Location and date: Washington, DC, April 14, 2022.",
    "Core framing: The world faces a crisis on top of a crisis—first the pandemic, and now Russia’s invasion of Ukraine—compounded by a growing risk of fragmentation of the world economy into geopolitical blocs.",
    "Human impact highlighted:",
    "Key systemic risk: Fragmentation into different trade and technology standards, payment systems, and reserve currencies would incur painful adjustment costs, with poor countries and poor people bearing the brunt.",
    "Pre-war and pandemic context:",
    "Scope of impact:",
    "Commodity and inflation effects:",
    "Medium-term and distributional consequences:",
    "Elevated uncertainty: The outlook is extraordinarily uncertain—beyond normal range—with risks that the war and sanctions could escalate, new Covid variants could emerge, and crops could fail.",
    "Policy dilemma posed succinctly: How can policymakers rein in high inflation and rising debt, while maintaining critical spending and building foundations for durable growth?",
    "Immediate priorities (enumerated):",
    "End the war / support Ukraine and neighbors:",
    "Confront Covid:",
    "Tackle inflation:",
    "Address debt:",
    "Structural transformations to seize:",
    "Synthesis of risks: In seven weeks the world experienced a second major crisis—a war on top of a pandemic—risking erosion of progress made recovering from Covid, and threatened further by fragmentation into geopolitical and economic blocs.",
    "Interconnected consequences stressed: war in Europe can create hunger in Africa; pandemics and emissions are global in impact.",
    "Core prescription: The only effective remedy is international cooperation; efforts to solve global challenges must be indivisible.",
    "Institutional role: With near universal membership, the IMF positions itself as a tried and tested platform for global collaboration, providing policy advice and financing to those hardest hit.",
    "Historical resonance: Quote from Bretton Woods context—U.S. Treasury Secretary Henry Morgenthau’s “elementary economic axiom”: “Prosperity, like peace, is indivisible.”",
    "Closing: The challenges are indivisible; so must be our efforts to solve them. Thank you.",
    "[https://www.imf.org/en/about/senior-officials/bios/kristalina-georgieva](https://www.imf.org/en/about/senior-officials/bios/kristalina-georgieva)",
    "[Russian Federation and the IMF](http://www.imf.org/external/country/RUS/index.htm)",
    "[Ukraine and the IMF](http://www.imf.org/external/country/UKR/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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