The Path to Growth

IMF News, April 13, 2023

Source details

Canonical URL

The Path to Growth

Other formats

• Markdown version
• Structured JSON version
• Bundle manifest

Bibliographic details

• Published: April 13, 2023

Overview

• Speech: "The Path to Growth: Opening Remarks for the Spring Meetings Press Conference by Kristalina Georgieva, IMF Managing Director"
• Location and date: Washington, DC, April 13, 2023
• Key framing: world economy resilient to multiple shocks but facing a combination of weak growth and sticky inflation; "the weakest medium-term forecast in decades."

Global outlook and risks

• World Economic Outlook projection: global growth to slow down to 2.8 percent in 2023 and remain weak, at around 3 percent, over the next five years.
• Underlying inflation "remains stubbornly high."
• Geo-economic fragmentation affects trade and capital flows; downsides risks have increased.
• Recent banking sector pressures have made fighting inflation and safeguarding financial stability more complex.
• Low-income countries face high debts and lagging per capita income growth, making convergence harder.

Three priorities on the path to growth

• Restore price stability and safeguard financial stability
  • Central banks expected to "stay the course in the fight against inflation—holding a tight stance to prevent a de-anchoring of inflation expectations."
  • Fiscal policy: "Further effort to reduce budget deficits is critical to support the fight against inflation and reduce debt, but this must be coupled with targeted support for the most vulnerable."
  • Financial stability: central banks should address risks where they emerge, coordinating with regulators and supervisors; monitor risks in banks, non-bank financial institutions, and sectors such as commercial real estate.
• Rebuild the foundation to sustain future prosperity by advancing structural transformations and countering fragmentation
  • Priorities: accelerate the digital revolution, improve the business environment, boost human capital and inclusion, and pursue the green energy transformation.
  • Investment need: "An estimated $1 trillion a year is needed for renewable energy alone."
  • Costs of fragmentation: long-term cost of trade fragmentation could be as high as 7 percent of global GDP; "If we add technological decoupling, some countries could lose up to 12 percent of GDP."
  • Fragmentation of capital flows, including foreign direct investment, would further hit global growth.
• Solidarity with the most vulnerable countries
  • IMF financing since the start of the pandemic: "nearly $300 billion in new financing for 96 countries—more than half our members."
  • Recent approvals: "Just in the six months since our Annual Meetings our Board has approved 23 new arrangements."
  • "Nearly half of our financing commitments in the past three years have been done through our precautionary facilities—like the one approved for Morocco last week."
  • Support has been stepped up for vulnerable middle-income countries, including through a temporary increase in the amount members can borrow from the IMF.
  • Recent financing to countries such as Sri Lanka and Ukraine.
  • New tools: Food Shock Window (helps cope with economic consequences of Russia’s war in Ukraine) and the Resilience and Sustainability Trust (focused on long-term challenges such as climate change).
  • RST uptake: "Five countries are already benefitting from RST support, with many more in the pipeline."

IMF-led multilateral efforts and debt treatment

• Global Sovereign Debt Roundtable (co-chaired by IMF, the World Bank, and India as G20 Chair) is advancing restructuring cases, including under the G20’s Common Framework.
  • Recent outcomes:
  • Agreement to improve information sharing on macroeconomic projections and debt sustainability assessments at an early stage in the debt restructuring process.
  • Common understanding on the role that MDBs can play, "notably through the provision of positive net flows of concessional finance."
  • Decision to pursue a workstream, including a workshop in the next weeks, on how to assess and enforce comparability of treatment.

Resource needs and recent pledges

• Appeal for PRGT funding: called for "$4.7 billion in loan resources and $1.6 billion in additional subsidy resources to maintain this interest-free support."
• Recent pledges/contributions: "Ireland, Japan, Portugal, Saudi Arabia and the UK" have come forward with substantial new pledges or contributions.
• Call to members to complete the review of quotas "so that we can continue to strongly fulfill our mission."

Closing

• Emphasis on continuing work "this week, and beyond" and confidence in overcoming challenges together.

Source: "The Path to Growth: Opening Remarks for the Spring Meetings Press Conference by Kristalina Georgieva, IMF Managing Director", Washington, DC, April 13, 2023.

References

• The Managing Director's Global Policy Agenda, Spring Meetings 2023: Safeguard Economic Stability, Support Vulnerable Countries, Sustain Our Future Prosperity
• https://www.imf.org/en/about/senior-officials/bios/kristalina-georgieva
• Ukraine and the IMF
• Saudi Arabia and the IMF
• Sri Lanka and the IMF
• Speeches
• PRESS CENTER
• Spring Meetings
• World Economic Outlook
• one approved for Morocco last week
• Sri Lanka
• Ukraine
• Food Shock Window
• Resilience and Sustainability Trust
• Global Sovereign Debt Roundtable
• key players met yesterday
• https://www.imf.org/en/home