## Transcript of October 2022 MD Kristalina Georgieva Press Briefing on GPA

_IMF News, October 13, 2022_

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## Bibliographic details
- Published: October 13, 2022

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### Key messages
- The global economy has been hit by successive shocks: an unrelenting pandemic, Russia's invasion of Ukraine, climate disasters on all continents, and now a cost of living crisis.
- The IMF cut its growth forecast for 2023 to 2.7 percent.
- Uncertainty is exceptionally high: the World Economic Outlook shows a one in four chance, in other words, 25 percent chance that global growth could drop to a historic low of 2 percent next year.
- The IMF’s Global Policy Agenda calls for steady hands on policy levers and coordinated international action to minimize policy missteps and poor communication.

### Economic outlook and risks
- Growth and inflation:
  - IMF growth forecast for 2023: 2.7 percent.
  - One in four chance (25 percent) global growth could drop to 2 percent next year.
  - Risk of global recession assessed at 25 percent.
  - One third of the world economy equivalent will experience two or more consecutive quarters of negative growth.
- Inflation dynamics:
  - Rising interest rates come at some cost to growth, but insufficient tightening risks higher rates for longer.
  - Monetary policy must act decisively when necessary and communicate clearly to avoid de-anchoring inflation expectations.
  - Fragmentation and shifts in supply chains may create more permanent cost-structure changes that monetary policy cannot address.

### Policy priorities and recommendations
- Bring inflation down:
  - Central banks should take decisive action where necessary and communicate intentions clearly.
- Responsible fiscal policy now:
  - Prioritize protecting vulnerable households and businesses.
  - Fiscal measures should be well targeted and temporary given high debt levels post-pandemic.
  - Avoid across-the-board fiscal support that is neither effective nor affordable.
  - Ensure fiscal and monetary policy go hand in hand; “When monetary policy puts a foot on the brakes, fiscal policy should not step on the accelerator.”
- Safeguard financial stability:
  - Macroprudential policies should be vigilant and proactively address pockets of vulnerability.
- Support vulnerable emerging markets and developing countries:
  - Higher borrowing costs, a stronger dollar, and capital outflows are a triple blow—especially for countries with high debt.
  - Stronger international efforts are paramount for low-income countries, where over 60 percent are at or near debt distress.
- Transformational reforms for the future:
  - Address climate change, make digitalization work for people, and tackle inequality.
  - Act with urgency and together.

### IMF support, lending, and instruments
- Financial support since the pandemic:
  - Financial support provided to 93 countries, some $260 billion.
- Since the Russian invasion in February:
  - Supported 18 new programs (new programs and augmentations) with close to $90 billion.
  - There are an additional 28 requests for support from the Fund.
- SDRs and on-lending:
  - $650 billion SDR allocation noted.
  - Ambition of mobilizing $100 billion in lending of SDRs for countries in strong positions.
  - Progress: 80 percent to target; “We have just crossed over $80 billion.”
- Resilience and Sustainability Trust:
  - First-ever longterm financing instrument now operational.
  - Pledges of $40 billion.
  - Staff-level agreements for the first three countries: Barbados, Costa Rica, and Rwanda.
- Food Shock Window:
  - Emergency financing window opened to provide rapid financing to urgent needs.
- IMF lending capacity and resources:
  - Slightly over $700 billion available to lend.
  - Lending capacity referenced as 1 trillion.
  - On average around 20 percent of the SDRs strong economies have received; France indicated 30 percent.
  - The IMF may appeal to members to do more if needed.

### Debt, debt resolution, and the Common Framework
- Debt challenges:
  - Over 60 percent of low-income countries are at or near debt distress (also referenced as 60 percent of [low-income] countries are at or near debt distress).
- Common Framework:
  - IMF pressing for a more effective debt resolution mechanism.
  - Goal: make the Common Framework more predictable with guidelines and equality of treatment for all creditors, public and private.
  - Recent modest successes: Zambia and Chad.
  - Need to draw lessons from Zambia and Chad to encourage other countries to use the Common Framework.
- Donor coordination:
  - Exploring ways to expand coordinated donor approaches to middle-income countries, e.g., Sri Lanka.

### Regional notes and vulnerabilities
- Food insecurity:
  - 345 million people are acutely food insecure.
  - 48 countries identified as particularly severely impacted by food insecurity; many in Sub-Saharan Africa.
- Sub-Saharan Africa:
  - Region in a precarious position due to pre-existing climate-related food insecurity and COVID scarring (including education disruptions).
  - Positive developments: many countries increased tax-to-GDP ratios and built stronger fundamentals.
  - Policy advice: stick to prudent macroeconomic policies, act early on debt problems, and use multilateral support (IMF, World Bank, WFP, FAO, WTO).
  - Emphasized priority: implement major integration efforts such as the Continental Free Trade Agreement.
- Lebanon:
  - Inflation at extreme levels in Lebanon (example noted of inflation “at 200 percent or more” contextually discussed); IMF staff-level agreement exists but prior actions needed to move forward.
  - A maritime border agreement with Israel is noted as potentially positive for energy prospects, conditional on political commitment to stability.
- India:
  - Described as a bright spot underpinned by structural reforms and digitalization.
  - Anticipation that India’s G20 Presidency could focus on digitalization, digital money, cross-border payments, quota review, and renewables.

### Scenarios and probabilities highlighted
- Global growth could fall to 2 percent next year: one in four chance (25 percent).
- Risk of global recession: 25 percent.
- One third of the world economy equivalent may face two or more consecutive quarters of negative growth.

### Q&A highlights (policy and governance)
- On central banks (U.S. Fed and others):
  - Central banks’ mandate is domestic price stability; communication and use of instruments like swap lines can mitigate spillovers.
  - Recent Fed and U.S. Treasury actions noted as prudent; U.S. has supported food security and multilateral institutions.
- On the pace of rate hikes:
  - Acknowledged concerns about financial stability; emphasized need for clear communication and coordination with fiscal policy.
- On IMF governance and quota review:
  - Sixteenth General Review of Quotas is important for a financially strong and fairly representative IMF.
  - Deadline for quota decisions mid December 2023; possibility of acceleration under G20 leadership.
- On IMF flexibility:
  - IMF programs are not set in stone; the Fund will monitor and act in the interest of member countries’ people.
- On availability for members:
  - Encouraged members to use IMF precautionary facilities if they need buffers; “we are far from being constrained.”

*Transcript of October 2022 MD Kristalina Georgieva Press Briefing on GPA — October 13, 2022, IMF Communications Department.*

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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)
- [Ukraine and the IMF](http://www.imf.org/external/country/UKR/index.htm)
- [Argentina and the IMF](http://www.imf.org/external/country/ARG/index.htm)
- [India and the IMF](http://www.imf.org/external/country/IND/index.htm)
- [Lebanon and the IMF](http://www.imf.org/external/country/LBN/index.htm)
- [United States and the IMF](http://www.imf.org/external/country/USA/index.htm)
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_Source: https://www.imf.org/en/news/articles/2022/10/13/tr101322-transcript-of-md-press-briefing-annual-meetings_