## Transcript of April 2023 MD Kristalina Georgieva Press Briefing on GPA

_IMF News, April 14, 2023_

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## Bibliographic details
- Published: April 14, 2023

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### Opening remarks — global outlook and risks
- Global growth projection: slow down to 2.8 percent in 2023 and remain weak at around 3 percent over the next five years.
- IMF characterization: "the weakest medium‑term forecast in decades."
- Underlying inflation: described as "stubbornly high."
- Geopolitical factors: contribute to economic fragmentation, affecting trade and capital flows and increasing downside risks.
- Recent banking sector pressures: make fighting inflation and safeguarding financial stability more complex.
- Vulnerability of low‑income countries: high levels of debt and lagging per capita income growth make catching up harder.

### Three priorities of the Global Policy Agenda
- Priority 1 — Restore price stability and safeguard financial stability:
  - Central banks: expected to "stay the course" and hold a tight stance to prevent de‑anchoring of inflation expectations.
  - Fiscal policy: "Further efforts to reduce budget deficits" to support inflation fight and reduce debt, while protecting the most vulnerable.
  - Financial stability monitoring: vigilance on risks hidden in banks, non‑bank financial institutions, and sectors such as commercial real estate.
- Priority 2 — Rebuild foundations for future prosperity:
  - Structural transformations: accelerate digital revolution, improve business environment, boost human capital and inclusion, and advance the green energy transformation.
  - Investment need for renewable energy: "We estimate $1 trillion a year needed just for renewable energy."
  - Costs of fragmentation:
    - Trade fragmentation long‑term cost: "as high as 7 percent of global gross domestic product (GDP)."
    - Technological decoupling potential loss: "some countries could lose up to 12 percent of GDP."
    - Fragmentation of capital flows, including FDI, would further hit global growth.
- Priority 3 — Solidarity with the most vulnerable countries:
  - IMF financing since pandemic start: "nearly $300 billion in new financing for 96 countries."
  - Recent Board approvals: "Just in the six months since our Annual Meetings in October, our Board has approved 23 new borrowing arrangements."
  - Precautionary facilities: "Nearly half of our financial commitments in the last three years has been done through our precautionary facilities."
  - Resilience and Sustainability Trust (RST): "We have five countries already benefiting from the RST. We have 44 expressing interest in it."

### Sovereign debt restructuring and the global sovereign debt roundtable
- Roundtable co‑chairs: World Bank, IMF, and India as G20 Chair; first time public, private creditors and borrowers sat together.
- Outcomes and agreed actions:
  - Improve information sharing on macroeconomic projections and debt sustainability assessments at an early stage of restructuring processes.
  - Common understanding on the role MDBs can play, notably through provision of positive net flows of concessional finance.
  - Establish a clear workstream, including a workshop on how to access and enforce comparability of treatment, with the main purpose to accelerate restructuring.
- Timelines and comparability of treatment:
  - Need to define principles and parameters for setting timelines; recognition that decisions will be case‑by‑case but within defined timelines.
- Lending into arrears policy:
  - Policy exists and was applied in the case of Suriname.
  - Rationale: allows IMF support when a creditor has not provided assurances; risks include "kicking the can down the road" and potential moral hazard if a country later pays a holdout creditor.
  - Position: it is "an option that we will use when we believe there is no way to do the best one, to be in plan A" — where plan A is debt restructuring.

### IMF concessional financing and PRGT funding appeal
- Concessional financing growth: "has increased more than four‑fold since the onset of COVID."
- IMF funding request coming into the Spring Meetings: "we have been calling for $4.7 billion in additional loan resources and $1.6 billion in additional subsidy resources to maintain interest‑free support."
- Recent pledges: five countries — "Ireland, Japan, Portugal, Saudi Arabia and the U.K." — have come forward with substantial new pledges or contributions.
- Call to members: successful completion of the Review of Quotas this year to sustain IMF capacity.

### Country‑specific updates and program implementation
- Argentina:
  - Executive Board completed the fourth review of the program on March 31.
  - Authorities faced a severe drought; IMF partially accommodated impacts in modification of the net international reserve accumulation target.
  - IMF emphasis: continued commitment depends on policy implementation.
- Ghana:
  - IMF team has been working to put in place "a 3 billion support program for Ghana."
  - Expectation of creditor discussions "next week" and optimism that creditors will move swiftly; program described as a "bridge" for Ghana to return to markets.
- China:
  - Managing Director visit noted meetings with Premier Li Qiang and other leaders; impressed by China's continuing reopening and reforms.
  - IMF projection for China in 2023: "5.2 percent growth."
  - Domestic Chinese projection cited as "about 5 percent."
  - Role in global growth: "China this year is going to contribute about one third of global growth."
  - Spillovers: "1 percent more growth in China translates into 0.3 percent more growth for the economies that are connected to China."
  - Challenges flagged: handling real estate and redirecting growth toward domestic consumption.
- India and G20:
  - India praised for focusing the G20 on key global economic challenges, digitalization, and active engagement on debt issues and the sovereign debt roundtable.
- Pakistan:
  - Climate vulnerability stressed; recent floods described as "much more dramatic" than 2011.
  - IMF working with authorities under current program to avoid debt becoming unsustainable; discussing financial assurances with supporters to complete the program.
- Egypt:
  - Extended Fund Facility (EFF) program elements: exchange rate liberalization; increase private sector role; moderate timing of long‑term investment projects to protect macro stability.
  - Review process: teams preparing to carry out the review following the program approved last December; the first review had been planned for "the 15 of March."
  - IMF role: anchor debt resolution through programs and support for inclusive and effective debt resolution processes.

### IMF operational stance and institutional role
- IMF as convenor: emphasized as an institution that "bring everybody around the same table" to build common understanding and trust amid fragmentation pressures.
- Financing support rationale: IMF programs "anchor debt resolution," highlighting the need for IMF financial capacity to contribute to debt restructuring efforts.

### Fragmentation, friend‑shoring, and supply‑chain security
- Drivers: COVID and Russia’s invasion of Ukraine have elevated security of supplies and reliable supply chains to higher priority.
- Concern: risk of a new "cold war" style split would cause loss of talent and contributions and harm global welfare.
- Cost estimates of fragmentation referenced from IMF analysis:
  - Trade fragmentation costs between "0.2 percent and 7 percent."
  - Technological decoupling could produce larger losses (see earlier: "up to 12 percent of GDP" for some countries).
- Policy prescription:
  - Enhance security of supplies without pushing the world into deep fragmentation.
  - Use institutions (like the IMF) and cooler‑headed policymaking to keep fragmentation costs low and defend citizens’ interests globally.

*Transcript of April 14, 2023 press briefing with Kristalina Georgieva, Managing Director, IMF.*

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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)
- [Proposals for a Sovereign Debt Restructuring Mechanism (SDRM) -- A Factsheet](https://www.imf.org/external/np/exr/facts/sdrm.htm)
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_Source: https://www.imf.org/en/news/articles/2023/04/14/tr41423-md-gpa-press-briefing-transcript_