As prepared for delivery
Ministers and Governors – Very good morning to you all! Thank you very much for taking time to join us for this meeting.
This is an important event. It is dedicated to the needs of a part of our membership that is particularly severely impacted by the multiple shocks we have been living in over the last years.
In March 2020, when the W.H.O. announced the start of the pandemic, at that time, all countries were faced with tremendous uncertainty, which was particularly dramatic for low-income countries. Just a week after W.H.O. announced the pandemic, the IMF approved the first emergency financing for the Kyrgyz Republic and disbursed it on the very same day.
Since then, we have stepped up support for low-income countries. Because without this support, not only their people would have experienced tremendous hardship, but that hardship would have created instability affecting way beyond their borders.
I want to focus on the challenge these countries face. We are no more at the time of providing emergency financing. Instead, we have very strong demand for upper credit tranche programs to help these countries build fundamentals and create opportunities for growth and employment for their people.
We know that at a time when the global economy is still experiencing a multiplicity of challenges from slow growth and high inflation. For these countries, these challenges translate into holding them back in their aspiration to catch up with the better offs. Their per capita income growth for 2023-24 is projected to 2.8 percent. This is the lowest per capita growth since 1990, and that puts them in danger for further divergence unless we act.
And I think you all have seen how important the presence of the IMF is, especially through upper credit tranche programs that build sound fundamentals and institutions in countries so they can improve their prospects for development. How important it is to bring debt resolution with IMF programs being at the heart of negotiations. And how important we are in mobilizing financing from other partners. I want to recognize the presence of the World Bank Group. We have worked extremely hard to bring our institutions’ strength everywhere, but especially in developing countries.
Clearly, we have a task in front of us to make the financial capacity of the IMF to support low-income countries as strong as the times require. Where are we? We have quadrupled financing for PRGT-eligible countries because of the needs of these countries going up. That means that we have provided $24 billion of financing since the start of the pandemic. Part in emergency, but primarily in program financing.
And we have invested our effort to support countries to pursue successful debt resolution. I am very pleased to have Chad present as one country where we managed to get the outcome of the work of the common framework in place. More need that support.
In addition to increase in demand, we are now experiencing higher interest rates. That makes bringing down the cost of lending to low-income countries harder. And as a result, the resource gap for the PRGT has grown.
We have to work together to close this gap. And I have no doubt we will be successful, especially in light of the fact that come October, we will be hosted by Morocco for our annual meetings. For the first time in 50 years, the Annual Meetings of the IMF and the World Bank will go to Africa. And it is so important that we go there demonstrating that we are able to stand by our poorest members, especially by our African members.
As an urgent first step as an urgent first step, what I call for is to close the subsidy gap by providing pledges of $1.6 billion, and we need $4.7 billion to close the loan resource gap. Remember, each $1 of subsidy mobilizes $5 of zero interest loans, and that is what countries rely on for us to be able to support them.
What this means is that by October, by closing this gap, we can restore access to concessional financing for PRGT-eligible countries at par with access for our GRA-eligible countries. That is meaningful on its own from a financial standpoint. It is also meaningful in terms of equality of treatment and the sense that we are one community – all our members.
We also know that more will be needed. We have a duty to make the PRGT whole and place its longer term financing on a sustainable footing. This means building consensus – by the Annual Meetings in Marrakech – on a phased, burden-shared strategy to replenish the PRGT so it can provide adequate support to our low-income members for the longer term.
So, I suggest that we launch this road to Marrakesh today. To help us see how we travel this road, we asked two leaders to provide us with some thoughts around what it means and why it matters. We will have two very short videos before we open the floor for discussions.
And again, thank you all for your contributions and for being here.
