International Monetary Fund Managing Director Kristalina Georgieva made the
following statement today at the third meeting of the G20 Finance Ministers
and Central Bank Governors in Gandhinagar, India:
I would like to thank the Government of India for the generous hospitality
and Minister of Finance Nirmala Sitharaman and Governor Shaktikanta Das for
their exceptional stewardship of the G20. I have said before that India is
a bright spot in the global economy, and the vibrancy of India has shined
through clearly during our gatherings.
Outlook
The global economy has shown some resilience. Despite successive shocks in
recent years and the rapid rise in interest rates, global growth—although
anemic by historical standards—remains firmly in positive territory,
supported by strong labor markets and robust demand for services. That
said, activity is slowing, especially in the manufacturing sector. Looking
further ahead, medium-term growth prospects remain weak. Moreover,
divergences in economic fortunes across countries are a persistent concern:
some pockets of the global economy are doing well; others are weakening but
still growing; and vulnerable countries are falling further behind.
On inflation, there is some encouraging news – the trend is finally
downwards. But headline inflation is still too high and core inflation
remains sticky despite the significant monetary policy tightening. Elevated
food and fertilizer prices are particularly worrying, especially for
low-income households for which food insecurity and malnutrition are now
much more persistent.
We are thus looking at a mixed picture, and risks remain on the downside.
Inflation could remain higher for longer, requiring even more monetary
policy tightening, and fragmentation could weigh even more on growth. To
mitigate these risks, I call upon G20 leaders to seize the opportunity to
move the global economy onto a more vibrant medium-term path. This requires
both domestic and international policy action.
Domestic Policy Priorities
-
The top priority is to durably bring inflation down.
While there is progress, the job is not yet done—monetary policy must
stay the course. A premature celebration can reverse the hard-won gains
made so far in the disinflation process. Rather, if we stay the course,
we can enjoy price stability as foundation for growth and prosperity.
-
Now is the time to rebuild fiscal buffers after a period
of exceptional policy accommodation. We would like to see fiscal policy
pursuing consolidation to enhance debt sustainability and support
disinflation, while ensuring adequate protection for the most
vulnerable.
-
Growth-enhancing reforms are needed to
boost productivity and raise living standards. Digitalization provides
great promise if we learn from proven successes, like that of India's
in public digital infrastructure, as a foundation for dynamism and
growth. To support these reform efforts, the
Fund will also expand its work
on mobilizing domestic resources, improving quality of country
spending, building deep capital markets and improving the environment
for private investment – both domestic and foreign.
Strengthening the International Financial Architecture
The international financial architecture has served the world well. Since
the second world war, the global economy has expanded by more than 10 times
in real terms. This has brought tremendous improvements in wellbeing for
people – for instance, average global life expectancy in 1950 was just
about 45 years.
But for the international financial architecture to continue to provide
benefits, we must recognize that the world today is more shock-prone and
fragile, with climate change, pandemics, and Russia’s invasion of Ukraine
all causing widespread turmoil. Resilience to shocks is not evenly
distributed – some countries are in better position to protect their people
than others.
So what are the priorities for G20 countries?
To protect the most vulnerable countries and their people, we need to
strengthen the global financial safety net. While advanced and strong
emerging market economies have a cushion of more than $10 trillion in
international reserves, the rest of the world relies on pooled resources of
international institutions such as the IMF.
- Today, while the IMF has nearly $1 trillion in lending capacity,
quota resources—which are critical to ensure the predictability of the
IMF’s firepower—have shrunk in relative terms. I appeal to G20 countries to
restore the primacy of IMF quota resources by successfully
completing the 16 th quota review by the end of this year.
- With our support for low-income countries having quadrupled in
recent years and demand still high, the IMF urgently needs to replenish
subsidy resources in the Poverty Reduction and Growth Trust (PRGT). I call
on the G20 to close the PRGT’s subsidy gap and put it on
sustainable footing for the future, including by exploring options for
using the IMF’s internal resources.
- The IMF’s newest instrument, the Resilience and Sustainability
Trust (RST), has been funded through on-lending SDRs – a great innovation
that transforms a ‘sleeping asset’ of countries in strong positions into
firepower to support vulnerable countries. The G20 has reached its target
of committing $100 billion for SDR channeling to vulnerable countries. For
the IMF, this has mobilized US$45 billion for the PRGT and US$42 billion
for the RST. Let us work together to
increase the firepower of the RST
.
On restoring debt sustainability – we have
made welcome progress. The recent agreement on Zambia’s debt restructuring
was a significant milestone for the G20 Common Framework, building on
earlier steps to address Chad’s debt. The Global Sovereign Debt Roundtable
(GSDR)—co-chaired by India’s G20 Presidency, the IMF and the World Bank—is
facilitating a common understanding of key issues, including comparability
of treatment and information sharing. While this progress is important and
welcome, the debt restructuring process still needs to be speedier and more
effective. The costs of delays in reaching agreement on needed debt
treatments are borne acutely by borrower countries and their people, who
are least able to bear this burden. The GSDR is the right forum to push for
more progress, including clear timelines, debt service suspension during
negotiations, and improved creditor coordination on debt treatment for
countries outside the Common Framework.
And so we have work to do. Our world may be wealthier today than when the
current international financial architecture was established, but it is
also more fragile. The global economy has shown resilience, but this
resilience is not evenly distributed. With domestic policy actions to
durably brighten growth prospects and international action to support the
most vulnerable members of our global community, we can achieve a more
vibrant and inclusive future.