{ "title": "Opening Remarks at “Policymaking in Choppy Waters: Fostering Resilience in Central, Eastern, and Southeastern Europe”", "publication": "IMF News, June 2, 2023", "sourceUrl": "https://www.imf.org/en/news/articles/2023/06/02/sp060323-md-opening-remarks-at-policymaking-in-choppy-watters-cesee", "canonical": "https://www.imf.org/en/news/articles/2023/06/02/sp060323-md-opening-remarks-at-policymaking-in-choppy-watters-cesee", "overlayPath": "/en/news/articles/2023/06/02/sp060323-md-opening-remarks-at-policymaking-in-choppy-watters-cesee/index.md", "summary": "Good Morning! Thank you to Prime Minister Plenković and Governor Vujčić for the kind invitation, and to all of you for joining us at this third Croatian National Bank-IMF conference. It is a pleasure to come to Dubrovnik, a city I admired well before its Game of Thrones fame.", "publishDate": "2023-06-02", "sections": [ { "heading": "Key observations on recent shocks and regional impact", "content": "- Since the last conference in 2019 the world has been hit by \"shock, upon shock, upon shock\": Covid; Russia’s war in Ukraine; a cost-of-living crisis; and accelerating impacts from climate change.\n- The war in Ukraine:\n - Has been \"absolutely devastating\" to peoples’ lives and the economy in Ukraine.\n - Sparked an unprecedented gas crisis and food price inflation across the rest of the region, \"especially impacting the most vulnerable.\"\n - Has sped up geo-economic fragmentation and led to rising defense budgets and adjusted supply chains.\n- Inflation and growth dynamics:\n - \"Headline inflation has been falling since late 2022, but it is still painfully high, and core inflation has yet to show clear signs of decline.\"\n - Projection: \"inflation will stay well above central bank targets past 2024.\"\n - \"Real GDP levels in 2024 are projected to be 3.5 percent lower than what we had expected at the beginning of 2020\" (excluding Belarus, Russia, and Ukraine).\n - This shortfall is characterized as \"like taking €50 billion out of peoples’ pockets over these five years.\"\n- Regional resilience: historical analogy to Dubrovnik (Ragusa) emphasizes open economy, prudent state finances, social services, and investment in education as sources of resilience." }, { "heading": "Three main challenges identified", "content": "- Bringing down inflation while sustaining the recovery and laying foundations for future growth.\n - Monetary policy: \"countries with independent central banks will need to keep a tight policy stance—and possibly tighten further if inflation remains sticky.\"\n - Fiscal policy: \"staying prudent while protecting the vulnerable\" and \"Consolidation should be even more ambitious than currently planned in most of the region.\"\n - Structural policies: invest in people (reskilling, subsidizing childcare) to expand the workforce and ease labor shortages; integrate Ukrainian refugees while supporting returns to Ukraine.\n - Examples of integration measures:\n - Poland and Estonia created online tools helping Ukrainians find jobs faster than previous refugee groups.\n - Czech Republic is easing recognition of refugees’ professional qualifications.\n - Language support highlighted as providing \"strong returns\" to host countries and as an investment in Ukraine's future.\n- Energy security.\n - Analogy: Ragusa’s 12-kilometer aqueduct as a precedent for major public infrastructure.\n - Examples:\n - Baltic Synchronization Project to connect Estonia, Latvia, and Lithuania to the EU electricity network.\n - Projects to close remaining gas bottlenecks.\n - Policy levers:\n - Increase public and private investment in renewables.\n - Adopt more ambitious emission reduction targets and more effective policies to meet them.\n - \"Carbon pricing is needed—it is the fastest, most efficient way to achieve climate goals.\"\n - Standards and regulations also have a role; domestic actions plus EU climate policy support can accelerate the green transition.\n- Seizing opportunities in a fragmented world.\n - Risk: multinationals may keep production at home, making it harder for the region to integrate into global supply chains.\n - Opportunity: some production may relocate closer to home (e.g., from Asia), creating prospects for the region.\n - Policy enablers:\n - Stay open to trade.\n - Non-EU members: further align regulations and technological standards to draw investment and increase access to the EU market.\n - Invest in transportation and digital infrastructure.\n - Quantified simulation finding: \"with improved connectivity and the same efficiency of public investment as EU-15 countries, the impact of these infrastructure investments on long-term output in this region could nearly double.\"" }, { "heading": "Policy recommendations and priorities", "content": "- Monetary:\n - Maintain a tight policy stance where central banks are independent; consider further tightening if inflation remains sticky.\n- Fiscal:\n - Pursue more ambitious consolidation than currently planned in most of the region to:\n - Reduce inflation,\n - Lower debt service costs, and\n - Bolster financial stability.\n - Protect vulnerable populations during consolidation, following Ragusa’s example of social provisioning.\n- Structural and labor market policies:\n - Prioritize reskilling workers and subsidizing childcare to expand labor supply.\n - Implement measures to integrate Ukrainian refugees (job-matching tools, recognition of qualifications, language support).\n- Energy and climate:\n - Scale up public and private investment in renewables.\n - Adopt more ambitious emission reduction targets and effective policies to meet them.\n - Implement carbon pricing as a central instrument; complement with standards and regulations.\n - Invest in cross-border energy infrastructure (electricity synchronization, gas bottleneck elimination).\n- Trade, investment, and connectivity:\n - Remain open to trade to capture gains from shifting supply chains.\n - Align regulations and technological standards to attract investment, especially for non-EU members.\n - Increase public investment in transportation and digital infrastructure with improved efficiency to amplify long-term output gains." }, { "heading": "IMF role and engagement", "content": "- The IMF provides:\n - Policy advice and technical assistance, including public investment management.\n - Financing for Kosovo, Moldova, Serbia, North Macedonia, and Ukraine.\n - Resilience and Sustainability Trust funding for Kosovo to address longer-term climate challenges.\n- The IMF emphasizes partnership to help the region navigate ongoing shocks and to support long-term resilience." }, { "heading": "Closing message and long-term perspective", "content": "- The speaker draws inspiration from Dubrovnik’s historical choices: \"think long-term and build it right.\"\n- With \"the right choices and the right execution,\" policymakers can leave a durable and successful legacy comparable to Dubrovnik’s historic achievements.\n\nOpening Remarks at “Policymaking in Choppy Waters: Fostering Resilience in Central, Eastern, and Southeastern Europe”, Dubrovnik, Croatia, June 2, 2023\n\n---\n\n\n References\n\n- https://www.imf.org/en/about/senior-officials/bios/kristalina-georgieva\n- Czech Republic and the IMF\n- Speeches\n- PRESS CENTER\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2023/06/02/sp060323-md-opening-remarks-at-policymaking-in-choppy-watters-cesee" } ], "bullets": [ "[Markdown version](/en/news/articles/2023/06/02/sp060323-md-opening-remarks-at-policymaking-in-choppy-watters-cesee/index.md)", "[Structured JSON version](/en/news/articles/2023/06/02/sp060323-md-opening-remarks-at-policymaking-in-choppy-watters-cesee/index.json)", "[Bundle manifest](/en/news/articles/2023/06/02/sp060323-md-opening-remarks-at-policymaking-in-choppy-watters-cesee/bundle-manifest.json)", "Published: June 2, 2023", "Since the last conference in 2019 the world has been hit by \"shock, upon shock, upon shock\": Covid; Russia’s war in Ukraine; a cost-of-living crisis; and accelerating impacts from climate change.", "The war in Ukraine:", "Inflation and growth dynamics:", "Regional resilience: historical analogy to Dubrovnik (Ragusa) emphasizes open economy, prudent state finances, social services, and investment in education as sources of resilience.", "Bringing down inflation while sustaining the recovery and laying foundations for future growth.", "Energy security.", "Seizing opportunities in a fragmented world.", "Monetary:", "Fiscal:", "Structural and labor market policies:", "Energy and climate:", "Trade, investment, and connectivity:", "The IMF provides:", "The IMF emphasizes partnership to help the region navigate ongoing shocks and to support long-term resilience.", "The speaker draws inspiration from Dubrovnik’s historical choices: \"think long-term and build it right.\"", "With \"the right choices and the right execution,\" policymakers can leave a durable and successful legacy comparable to Dubrovnik’s historic achievements.", "[https://www.imf.org/en/about/senior-officials/bios/kristalina-georgieva](https://www.imf.org/en/about/senior-officials/bios/kristalina-georgieva)", "[Czech Republic and the IMF](http://www.imf.org/external/country/CZE/index.htm)", "[Speeches](https://www.imf.org/en/news/searchnews)", "[PRESS CENTER](http://presscenter.imf.org/)", "[https://www.imf.org/en/home](https://www.imf.org/en/home)" ], "alternates": { "markdown": "/en/news/articles/2023/06/02/sp060323-md-opening-remarks-at-policymaking-in-choppy-watters-cesee/index.md", "json": "/en/news/articles/2023/06/02/sp060323-md-opening-remarks-at-policymaking-in-choppy-watters-cesee/index.json", "bundleManifest": "/en/news/articles/2023/06/02/sp060323-md-opening-remarks-at-policymaking-in-choppy-watters-cesee/bundle-manifest.json" }, "generatedAtUtc": "2026-09-26T02:08:09.707Z" }