## IMF Managing Director Kristalina Georgieva Urges G20 Leadership to Address ‘Exceptionally Uncertain’ Global Outlook

_IMF News, July 16, 2022_

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## Bibliographic details
- Published: July 16, 2022

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### Context and key observations
- Press Release No. 22/261; July 16, 2022; Bali, Indonesia.
- Speaker: International Monetary Fund Managing Director Kristalina Georgieva at the hybrid meeting of the G20 Finance Ministers and Central Bank Governors.
- Core assessment: “The outlook has darkened significantly, and uncertainty is exceptionally high. Downside risks about which the IMF had previously warned have now materialized.”
- Drivers of the worsened outlook:
  - The war in Ukraine has intensified, exerting added pressures on commodity and food prices.
  - Global financial conditions are tightening more than previously anticipated.
  - Continuing pandemic-related disruptions and renewed bottlenecks in global supply chains are weighing on economic activity.
- Near-term projection action: “As a result, later this month we will project a further downgrade to global growth for both 2022 and 2023 in our World Economic Outlook Update.”

### Immediate economic risks and impacts
- Inflation risk: If inflation is more persistent, downside risks could deepen, “requiring even stronger policy interventions which could potentially impact growth and exacerbate spillovers particularly to emerging and developing countries.”
- Debt stress:
  - “More than 30 percent of emerging and developing countries are at or near debt distress.”
  - “For low-income countries that number is 60 percent.”
  - “With tightening financial conditions and exchange rate depreciations, the debt service burden is a harsh – and for some countries – unbearable burden.”
- Capital flows: Emerging and developing countries have experienced sustained capital outflows “for four months in a row,” risking reversal of “three decades of catching up with advanced economies.”
- Country example: “Look no further than Sri Lanka as a warning sign.”

### Policy priorities recommended by the IMF Managing Director
- Three priority areas to navigate the challenging environment:
  1. Bring inflation down
     - Rationale: “Failure to do so could risk the recovery and further damage living standards for vulnerable people.”
     - Current stance: “Central banks are stepping up. Monetary policy is increasingly synchronized: more than three-quarters of central banks have raised interest rates and have done so 3.8 times.”
     - Emphasis on: central bank independence, clear communication, and a data-driven approach.
  2. Use fiscal policy to help, not hinder, inflation control
     - Fiscal objectives: Reduce debt while providing targeted measures to support vulnerable households facing shocks, especially from high energy or food prices.
     - Trade-off: Growth slowing means “some people will need more support, not less.”
  3. Reinvigorate global cooperation
     - Priority areas: food insecurity and high debt.
     - Food security actions called for: support those in immediate need, remove export restrictions, promote food production, and invest in climate-resilient agriculture.
     - Collective initiatives: progress on SDR channeling and operationalizing new IMF instruments.

### Institutional and multilateral measures urged
- Common Framework (CF) for debt:
  - Need for CF to “deliver on its promise.”
  - Encouragement: “the three creditor committees for Chad, Ethiopia, and Zambia are meeting this week.”
  - Calls for action: “New rules and timelines should be established for the CF. And it is important to expand coverage to non-DSSI countries.”
  - Urgency: “I urge the G20 to come together on a way forward and to do so swiftly. The debt situation is deteriorating fast and a well-functioning mechanism for debt resolution should be in place.”
- Special Drawing Rights (SDRs):
  - Support for making progress on SDR channeling “to amplify the effect of the IMF’s recent US$650 billion SDR allocation.”
- Resilience and Sustainability Trust (RST):
  - Acknowledgement: G20 helped establish the IMF’s newest instrument—the RST—with “close to US$40 billion in pledges.”
  - Call to action: “Now is the time to turn those pledges into actual contributions for the new Trust to be operational by the Annual Meetings in October.”
- Poverty Reduction and Growth Trust:
  - Recognition: G20 members have pledged loan resources of “nearly SDR 8 billion (US$10.5 billion) – about three-quarters of what is needed.”
  - Expectation: “I am confident that additional pledges will be made soon.”

### Climate and energy transition
- Climate urgency: “We cannot lose sight of the most pressing crisis of all: climate change.”
- Recommendations:
  - Scale up financial resources for the climate transition.
  - Provide clear policy signals from national governments to decarbonize economies.
  - Leverage easing energy prices as an opportunity to “accelerate carbon pricing or equivalent measures.”

### Closing and IMF engagement
- The IMF will continue to support the G20 on the identified priorities.
- Forward-looking engagement: “I look forward to our next meeting in October.”

*International Monetary Fund. Press Release No. 22/261; July 16, 2022.*

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## References

- [https://www.imf.org/en/about/senior-officials/bios/kristalina-georgieva](https://www.imf.org/en/about/senior-officials/bios/kristalina-georgieva)
- [Indonesia and the IMF](http://www.imf.org/external/country/IDN/index.htm)
- [Sri Lanka and the IMF](http://www.imf.org/external/country/LKA/index.htm)
- [Special Drawing Rights (SDRs) -- A Factsheet](https://www.imf.org/en/about/factsheets/sheets/2023/special-drawing-rights-sdr)
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_Source: https://www.imf.org/en/news/articles/2022/07/16/pr22261-md-g20-statement_