Speakers:
Mohammad Aljadaan, Chairman of the IMFC, Minister of Finance, Saudi Arabia
Kristalina Georgieva, Managing Director of the IMF
Moderator:
Julie Kozack, Director, Communications Department, IMF
Transcript:
MS. KOZACK: Good morning, everyone. Welcome to this IMFC press briefing. It is wonderful to see you all here this morning. I am very happy to be joined by His Excellency, Minister Mohammed Aljadaan, Chair of the IMFC and Minister of Finance of Saudi Arabia, and IMF Managing Director Kristalina Georgieva. We will start as always with opening remarks, first by Minister Aljadaan, followed by the Managing Director, and after that, we will open the floor for your questions. Minister, over to you.
MR. ALJADAAN: Thank you. Thank you, Julie. Good afternoon to all of you. First, I would like to thank all the IMFC members for their productive collaboration throughout the week until a few minutes back. Actually, the work has extended over several months since we met last time. I would like also to thank our star‑‑and I mean that, Kristalina‑‑thank you very much for your leadership, for your dedication, and for leading an incredible staff at the IMF that actually gained an incredible, incredible praise by the members throughout the last few days. Please pass on our appreciation to them.
As the global economy is once again tested by geopolitical developments in the Middle East with serious macroeconomic and financial implications, we are now experiencing a new normal. It is a persistent uncertainty in the global economy. That said, persistence does not mean paralysis. It is our hope that peace will soon be restored around the world. This week the IMFC has discussed the immediate human and economic fallout from wars and conflicts. The IMFC members came together to affirm their commitment to reinforcing macroeconomic and financial stability.
Looking ahead, in this shock‑prone world, countries need to strengthen their resilience by being agile and proactive in implementing necessary reforms. With the increasing fiscal pressures in many countries, any new debt should be directed towards improving potential output without undermining debt sustainability.
IMFC members also noted that Central Banks remain strongly committed to maintaining price stability in line with their respective mandates and that independence and clear communication remain essential for boosting credibility and keeping inflation expectations anchored. They also expressed their support to the ongoing work on monetary policy framework for crisis and near‑crisis countries to further improve design considerations of monetary and exchange rate policies.
On a more positive note, members unanimously adopted the Diriyah Guiding Principles and the IMF Quota and Governance reforms‑‑the fairest such reforms in over 15 years. This represents a significant milestone in strengthening the IMF governance and will help improve our efficiency and effectiveness. It will also support the Fund's mission to promote monetary cooperation and help create a more prosperous future for all. The Diriyah Principles aim to drive further transparency and fairness in the process of negotiating countries' contributions as a part of the future IMF quota reviews.
As an example, the Diriyah Principles says the selection process of the Managing Director should uphold open, inclusive, merit‑based and transparent procedures, while also saying that the quotas and voting shares of low‑income countries will be protected. These reforms will help ensure fair representations of all members, including by ensuring regional balance at the Executive Board of the IMF.
I want to congratulate the IMFC members and Deputies for their diligent efforts to achieve these pragmatic solutions, helping to improve the readiness and relevance of the IMF and to bolster multilateralism. With that, I now give the floor to you, Kristalina.
MS. GEORGIEVA: Thank you very much, Aljadaan, dear Mohammed. I want to start by thanking you personally for your leadership as Chair of the IMFC. In a period of profound uncertainty, shock after shock, you have consistently fostered a spirit of collaboration and trust among our 191 members. And the Diriyah Principles are the clear evidence of how much you have achieved in bringing the membership together. On behalf of management and staff of the IMF, I want to thank you for your leadership and wish you all the very best at a time that is more turbulent back home.
MR. ALJADAAN: Thank you.
MS. GEORGIEVA: I would like to share four takeaways from our discussions and from the meetings we have had over the week more broadly.
First, the global outlook. The membership agreed that the supply shock from the war in the Middle East poses a serious threat to the global economy, even if the conflict ends tomorrow. The infrastructure damage and supply disruptions will inflict a toll for some time to come. The most vulnerable countries and people will be hit the hardest.
In our World Economic Outlook, we laid out a scenario where the war is short‑lived, in which the hit to global growth would be relatively modest, and we are all praying that the current ceasefire turns into a durable peace and that leads to durably opening the Strait of Hormuz for safe passage. But we also have to recognize that time is not our friend. With each passing day, risks are rising, that we will end up in a more adverse scenario, pushing us into an even lower growth and higher inflation. I want to elaborate on that. A tanker is a slow‑moving vessel. Every day tankers are not leaving, add at least 40 days to the first delivery. That translates into shortage not only of the oil and gas but also of naphtha and fertilizers, and that I think is the worry we have that every single day is a cost on the world economy.
My second takeaway is the power of coming together. The mood this week was constructive and focused, and I am very impressed by the seriousness with which the membership engaged. We had record attendance. This Spring Meetings we beat the record that was established last April. Why? Because when facing challenges and shocks, our membership sees the value of coming together to hear from each other, to learn from each other, to better calibrate action. Members were clear‑eyed about high uncertainty, limited fiscal space, and rising debt vulnerabilities. They came asking for practical policy solutions, and it was very uplifting to my staff and me how much trust they have in the Fund to serve them.
Third, what are these practical policy solutions? On fiscal policy, members listened carefully to our message that this is not the moment for untargeted measures, such as export controls or broad‑based tax cuts, which may only prolong the pain of high prices. We will continue to work with them to help design policy responses that are fiscally prudent and targeted to the most vulnerable groups.
On monetary policy, central banks emphasized that they are laser focused on their price stability mandates.
We are encouraging them to carefully balance the risks of tightening too soon versus waiting too long. And even as we focus on the near term, our members recognize that they must have their eyes also in the future. I was encouraged to hear broad support for structural reforms to raise productivity. Strong growth is the best shock absorber for countries, the best resilience builder in a world of frequent shocks and uncertainty.
Four, how the Fund is leaning forward. Members expect the IMF to remain an anchor of stability. That means strong and evenhanded surveillance, effective and well‑designed programs, deeper work on debt and global imbalances, and up capacity development, especially for low‑income and fragile states. This week we discussed with members individually and in bilateral meetings the modalities for how we can best provide financial support through augmentation of existing programs or new financing. And as you have heard me saying, we are seeing a range of between 20 and $50 billion.
We called on our members to provide their financial assurances to fully fund the PRGT. And if members of the media want to do something today for low‑income countries, for vulnerable countries, write about that. We need to get the PRGT strong for this time of uncertainty.
Finally, I want to welcome Venezuela back to the IMF family. As you will have seen, a majority of our membership by voting power has established relations with Venezuela, which has paved the way for the IMF to resume relations after a seven‑yearlong pause. We are committed to actively engage with Venezuela to do our part to help the country achieve macroeconomic and financial stability, to help the people of Venezuela to see better days. We will be coordinating closely with the international community, including the World Bank and the Inter‑American Development Bank.
I can tell you our membership expects a lot from the Fund. Minister Aljadaan finished his closing remarks (at the IMFC plenary), turned to our staff and said, "You may have made weekend plans, cancel them. We want a lot from you." Thank you.
MR. ALJADAAN: Thank you. (Applause).
MS. KOZACK: Thank you very much. We will now open the floor for questions. We will bring you the microphone. When called on, please state your name and affiliation. We will start right here in the front. We will go with the gentleman in the kind of checked shirt. David.
QUESTIONER: Thank you very much. What a week it has been. So, I have a question for each of you.
Managing Director, there has been a lot of discussion here with countries that have come forward to need help, need financial assistance here to cope with the strains caused by this conflict. Can you identify some of these countries that have come forward, and do you expect these to be more on the side of augmenting programs, more on the side of new programs? Have you discussed new modalities, new facilities to provide this assistance? Which regions are the most coming?
Then for Chair Aljadaan, if you could talk a little bit about today, we learned that maybe the strait is open, at least for a short period of time. Can you describe how that may be changing the outlook a little bit? Do you see this as something that could move us back towards‑‑away from the adverse scenario, more towards the reference forecast? And if you could talk a little bit about the infrastructure in your region that has been hit so hard and are we, say, in a position where the oil industry could be suffering for longer than expected? Oil wells, when they are not producing, do not produce as much as they did before. Thank you.
MS. GEORGIEVA: Thank you for your question. What I can tell you is that in terms of new programs, there are about a dozen countries with which during the week this issue of they need or they may need soon additional support has come up. We also have discussed programs that may eventually need augmentation, but the judgment there is we take this as indicative, and it will depend on developments over the next weeks. Should there be augmentation, we are talking about something in between five and eight programs that may end up with augmentations.
For the new programs, most are in Africa. I would not go into specificity because next week we also want to sit with the World Bank and compare notes and see who does what, what do we do together before we get into decisions. Why do we want to do that? Because the World Bank has one precious advantage. They can offer IDA grants. The Fund provides loans. Should there be a way to get the World Bank to step forward, with the Fund possibly providing more conditionality framework, making sure that the policy framework is right, that would be advantageous for countries. Should there be a need for both of us to go together because of the size of needs, we will elaborate.
As you have heard from President Banga, the World Bank is getting ready to provide liquidity support of up to $25 billion. We also will be talking to other organizations, to the African Development Bank. Actually, today we have the meeting of development banks and the IMF. We will talk about it.
Our objective is to make the most impactful use of resources, but you will start hearing from us in the course of the next weeks on how we go about making sure that we help members.
There is also a very important point, that we have an accordion of options because of the uncertainty around which of our scenarios will materialize. So we are ready to go bigger, if necessary, but, of course, we pray that there is a faster development, and that goes straight to Minister Aljadaan, who will tell you where we are on the range of scenarios.
MR. ALJADAAN: Thank you very much. I think answering the question is very tricky, to be honest. It is a very fragile situation, fluid, but I will tell you, we welcome any deescalation, and the fact that the Iranians announce that the Strait of Hormuz is open, re‑Tweeted by President Trump, as I understood it while I was in the meeting inside, and the market reacting by 10 percent is a good thing to start with. The worry that we have, and I can tell you from a country with possibly the most experience in this field, in the energy field, is convincing insurance companies to actually start insuring at a time when there is no agreement on cessation of hostilities. It is just a ceasefire that will expire in a few days’ time, and hopefully it will be extended, and we will end up hopefully with a deescalation. But without that, I do not think insurance companies will respond. I do not think oils of tankers will respond. It will take a bit of time. Assuming all of this, it will take a bit of time for producing countries to ramp up and this point. We will wait and see. I think the hope is that we will see a serious, serious credible deescalation. And until that happens, I do not think we are on whatever base scenario.
In relation to assets, I think it varies between countries. Obviously for a lot of strategic reasons, some may not want to announce where they were hit and how much they were hit, but I can tell you certain countries were able to restore their ability to produce and export very quickly, and some countries, because of the nature of the damage, will need a lot more time.
To me, I do not think the challenge today, I can tell you, I do not think the challenge today is how much production can be ramped up. It is really the logistics, the assurances that the market will need, that the waters are clear and there are no interruptions.
MS. KOZACK: Thank you. Let us go right here, front row, tan suit. Yes.
QUESTIONER: Thank you, Julie. Ms. Georgieva, I would ask the first question to you. Given, of course, the rapid developments in the last few hours, as our colleague just pointed out, can the IMF now with certainty that we are finally operating in the best case scenario of a short‑lived conflict or will the Fund continue to bake significant geopolitical risk into its global baseline despite today's market's cooling off.
To Minister Aljadaan, regarding the GCC, Minister, while decreased, of course, exports during the past period have initially been offset by the rising prices, especially for Saudi Arabia, the UAE and Oman, who is still exporting with high prices, how does the rapid jump in prices today adjust the fiscal outlook for the GCC, more importantly, moving forward with the GCC treasuries, still price, heavy geopolitical risks into the domestic growth and inflation scenarios. Thank you.
MS. GEORGIEVA: Thank you. Minister Aljadaan actually answered the first half of your question by saying this is a positive development. These kinds of signals help to reduce anxiety and uncertainty somewhat, but they are not eliminating it. We are still at a time when durable peace is to be achieved and the product of this peace, a free passage to be sustainably there. So I would say we are still at a point when we retain the scenarios that we have outlined with the understanding that our most optimistic scenario, one in which GDP growth slows down to 3.1 percent, is there, but perhaps we would see more of a sliding beyond that most optimistic point, hopefully not too far towards the adverse scenario. Would you agree, Mohammed?
MR. ALJADAAN: I agree. I would normally, particularly in this conference, would say I would not actually comment because we are talking about the IMFC, and I do not want to comment about specific nations, but because it is actually important to the world, I would say to start with, we all know that there is a very serious disconnect between the paper market and the actual physical market.
Therefore, despite the movements in the paper market, people want to find oil and want to find gas, and they are willing to pay significantly more as we speak just to get the material. So it does not really cause me a lot of hope that just the paper market moved. What really gives me a lot of comfort is if the physical market started actually to move.
MS. GEORGIEVA: If the tankers move.
MR. ALJADAAN: Exactly. If the clear waters are open, if insurance companies started actually to give the market insurance in reasonable prices, and if the tanker owners are willing to lease them and make them available to go into that territory, I think it would trigger for me a change in the scenario. I will stop there.
MS. KOZACK: Very good. All right. Let us go to the middle, gentleman in the white shirt, kind of right in the middle there.
QUESTIONER: Thank you, Julie. Good morning, Minister Aljadaan, Managing Director. My question is about Venezuela. As you said, Venezuela is back. I wanted to know when should Venezuela have a hope for a mission over there to assess the needs of the country and what the IMF is ready to provide to help the economy being more functional or more normal one, to quote Scott Bessent.
Perhaps more specifically for you, Managing Director, a week ago you said that you were hoping to give some courage to the governments to make meaningful, even hard‑measured reforms. Do you feel that mission has been accomplished?
MS. GEORGIEVA: To your first question, we all have been following the economic data on Venezuela. The country is in a very difficult spot. The economy over the last years contracted by two thirds; 8 million people left Venezuela. This is a higher percentage of the population than the Ukrainians leaving a country in war. Inflation is in triple digits. To get from this place to macroeconomic and financial stability is going to be a very tough road to travel.
We have been approached by the Venezuelan authorities, and we have already at a low technical level as allowed under the rules of disengagement, we have already been in touch with Ministry of Finance, central bank, statistical agency. We are ready to field a team. We have three tasks in front of you. The most pressing task, number one, is data. The country, not having had any serious engagement internationally, not just with the Fund, is in a place where data adequacy falls very short. You cannot make good decisions if you do not have good data.
Number two, we have to prioritize the support in terms of capacity building, in terms of strengthening the institutions in Venezuela.
And number three, very likely we will have to put in place a financial support program for Venezuela, provided we can agree on a way forward.
We will move very swiftly because what we have seen encouragingly is twofold. One, the Venezuelan authorities have already been providing information. They have engaged constructively, demonstrating good faith. Two, we have seen in the region the neighbors of Venezuela very much supporting the reengagement with Venezuela, and they themselves are offering to help. It is not going to be an easy process.
We all know that after the first euphoria of engagement comes the harsh reality this is going to take efforts of both sides, but I am very optimistic. And I can tell you for the people of Venezuela, it is such a good news. And I am so, so glad that the membership decided to bless our reengagement with Venezuela. I can also tell you that we are working very closely with the World Bank, InterAmerican Development Bank, so we can field coordinated support for the country for as high as possible impact.
MS. KOZACK: Very good. Thank you very much, Minister and Managing Director. This will conclude our press briefing. Thank you all so much for joining us. As always, the full transcript‑‑
MS. GEORGIEVA: Sorry. He asked me‑‑he had a second question. Did the policymakers listen to you? So, did they listen? Yes, very attentively. Some of them actually embraced this advice. And quite a number of our members spoke about targeted measures they are taking, spoke about the fiscal responsibility they embrace. And while we have seen in the data some deviation from targeted, temporary, and timely measures‑‑actually we also added transformative measures‑‑we have seen some deviations. It was incredibly impressive how that message resonated with the membership now from listening to acting upon what you hear, sometimes there is more difficulty. But I would say, Minister Aljadaan would confirm, that the seriousness with which this message was received was impressive. And many of the members spoke about this tough reality, shock upon shock upon shock upon shock, debt upon debt upon debt upon debt. In that environment, yet another fiscal pressure comes upon them. Right?
MR. ALJADAAN: Absolutely.
MS. KOZACK: Now I will bring the press briefing to a close. Thank you all for joining us and we wish you all a wonderful rest of your day.
MS. GEORGIEVA: Thank you.
