Transcript

IMFC Press Conference Transcript

October 14, 2022

SPEAKERS:
Kristalina Georgieva, Managing Director, IMF
Nadia Calviño, Chair of the International Monetary and Financial Committee (IMFC)
Moderator: Gerry Rice, Director, Communications Department, IMF

Mr. Rice: Hello, everyone. Good afternoon. Warm welcome. It is great to see you all here.

We are going to try to ‑‑ I am going to be very brief, because we do not have a lot of time, and we want to get to your questions as much as we can.

So, of course, this is the press conference on the IMFC. You are all familiar with that. It just met. The Chair of the IMFC, Nadia Calviño ‑‑ who is also, of course, the First Vice President of Spain, as you know ‑‑ chaired the meeting. Kristalina was right beside her there, as the Managing Director of the IMF. And they have just come from the room, quite literally, so they can give you a sense of what just happened.

You have the Chair’s Statement. I believe that has already been distributed to you, so you can take a look at that.

And we will get to your questions. If you can keep them very brief, please, we will try to be brief as well.

With that, I want to turn to the Chair to make some opening remarks. Kristalina will make some very brief opening remarks as well. And then we will turn to you.

Ms. Calviño: Thank you very much, Gerry. And you are very right in saying that we have just come straight from the closure of the meeting of the IMFC, which has been in person for the first time in three years. Actually, this is my first press conference in person also here, so it is a pleasure to see you.

It has been a quite intense and productive discussion. And I think it comes out with a strong message of confidence and hope, which is very much needed at this delicate and uncertain time for the global economy.

On top of the challenges derived from the pandemic, Russia’s war against Ukraine has created new risks. The shock in international markets for energy, food, and other raw materials, has slowed down global growth and increased inflation. It is threatening food security, as well as financial stability. These have been the major challenges identified and discussed during this week’s meetings.

Throughout the week, there has been a very strong call for Russia to stop the war against Ukraine. The war is the single most important element slowing down growth and generating inflation, volatility, energy and food insecurity, and uncertainty. So, therefore, peace is the most important economic policy tool right now.

We have tried our very best to reach an agreement on a communiqué. Our teams have managed to agree on a full document that addresses all the issues that have been discussed at the IMFC, all the core issues that are discussed in these Annual Meetings. And I regret very much that, due to Russia’s blocking any chance of a consensus, we do not have unanimity on a communiqué.

I have, therefore, issued a Chair’s Statement, which includes the text which was agreed by all countries participating. And I deeply regret that we are at this point again. But the key takeaway from the meetings is that there are many areas where we have, in fact, come together with shared priorities and a strong commitment to address our common challenges together.

Today’s uncertainty calls for a carefully calibrated policy mix, for a stronger coordination between the countries to limit spillover effects in other jurisdictions of the policy decisions, notably, in most vulnerable countries. There is a call for fiscal responsibility, as well as social fairness. The IMF has a key role to play in helping to mobilize financing and providing emergency assistance through new instruments, such as the food shock window, also the Resilience and Sustainability Trust, which play a very important role and have been greatly supported and appreciated by all the members. And I am proud to note that Spain has been the first contributor to this new trust.

Unity and solidarity is now more important than ever. We owe it to ourselves and to the future generations. People matter. We need to deal with what is urgent, without losing sight of what is important. And there has been a reinforced commitment to multilateralism, to make sure that our actions today ‑‑ that matter for the future ‑‑ are taken in the most united manner possible.

I think that this is a very fast summary of what the Chair’s Statement says and what has been discussed in these very intense and fruitful, I think, discussions and meetings here in Washington.

So thank you, Kristalina. And thanks to the whole IMF team. Well, there was a round of applause, actually, for the IMF team because of their outstanding work in supporting economic and financial stability, supporting the most vulnerable countries in these delicate and challenging times for all of us and for the global economy.

Ms. Georgieva: Thank you, Nadia, for chairing the meetings so extremely well during a difficult time for the world economy.

I completely endorse the assessment you gave to what the meetings focus on and how they brought the Finance Ministers, Central Bank Governors, in a very meaningful way, together.

I am also grateful that the meetings were very supportive of the Global Policy Agenda that I shared with many of you prior to the meetings.

What I want to focus on here is what, concretely, I see as a benefit for where we are headed after of these meetings.

One, a very substantive discussion on policies, leading to a more cohesive approach we have as a community that benefits individual countries and it benefits the world economy. It is very important that we assess the problems in front of us correctly and we define the way to address these problems correctly.

Second, a very strong endorsement of the role of the IMF at the center of the global financial safety net. We have just slightly over $700 billion available to deploy. That is very encouraging for emerging market and developing economies that are now at a point of higher uncertainty. And the message from the meeting was for the IMF to use all instruments and all its ability, should that be necessary, especially use our precautionary facilities.

A very strong support for focusing on the most vulnerable countries. And in that regard, I counted, almost universally, the food shock window is seen as a very timely response that can provide swift emergency financing to countries that face balance of payments needs because of the high food prices. And during the meeting, there were a number of people referring to the high fertilizer prices as potentially a risk for next year, not only the risk that we face today but a risk that may be amplified next year.

For the ability for us to expand our liquidity provision capacity and reserve provision capacity through the on‑lending of SDRs, there was a much stronger sense in the room that this is a line of defense that we can make available to our members, and it is also a line of offense when it comes down to addressing climate and addressing risks of future pandemics.

The countries that were the first to provide support ‑‑ Australia, Canada, China, Germany, Japan, and Spain. Spain actually should come first because they were the first to provide financing ‑‑ and a number of those who were in the room that have not yet pledged, indicating an intention to pledge. Of course, this would give us more lending capacity and lending capacity on terms that are very attractive for our members.

But there was also a recognition that there is more that we need to do, especially in the area of debt. And urging the IMF to very forcefully step forward with possible solutions to bring more impactfulness in the Common Framework and also to proactively work for the creditors and debtors to seek an early resolution to debt problems, that we need clear guidelines, we need more predictability, and we need fair treatment of all creditors, public and private.

I want to finish by saying what I said in the end. We were running out of time. Nadia turned to me and said, “how would you sum up this meeting?” And my summing up was “buckle up and keep going.” And this is what we intend to do. Thank you.

Mr. Rice: Thanks, Kristalina. Thanks, Nadia.

Look, yesterday at the press conference, I promised that we would call upon people who did not get the opportunity yesterday. So I am going to try to do that today. And in that spirit, I am going to call upon Patricia of EFE, right there, for the first question.

QUESTIONER: OK. Thank you very much, Gerry.

I wanted to ask to Ms. Calviño, please, about the main message that has been discussed in this meeting, to tackle the cost‑of‑living crisis and considering that Russia has triggered this situation. And you said you made a strong call for Russia to stop the war. What was the Russian response? Thank you.

Ms. Calviño: Well, thank you very much.

I think that the general discussion and the main message that has been expressed by members in these days has been one of identifying the war as the single most important factor bringing about uncertainty, instability, and the cost‑of‑living crisis throughout the world.

The impact of the war goes well beyond the European borders. Most countries are suffering food insecurity, energy insecurity, rising prices, or even financial stability risks due directly or indirectly to the war. And there has been a strong call ‑‑ I would say stronger than in the spring, Kristalina. There has been a strong call for Putin, for Russia to stop the war.

Now, obviously the point of view of the country is different, and that is why I was referring to, unfortunately, the fact that, due to Russia being unable to join the consensus, I had to issue a Chair’s Statement. But this Chair’s Statement reflects the agreement, unanimous agreement on all the substantive issues discussed during the IMFC and the disagreement by one of the members on the political issues, at the beginning of the statement.

Mr. Rice: Kristalina, do you want to come in?

Ms. Georgieva: It is very clear for ‑‑ just on a human level, on a practical level, on an objective level, stop the war. Stop the war. I am looking at this audience. Wouldn’t you be thinking that this is a more straightforward way to get the world economy in better shape? Stop the war. And that actually echoed throughout the meeting as a message that we align with, with one exception.

Mr. Rice: Thanks, Kristalina.

Maoling, you were very patient yesterday. I am sorry I missed you. I will call upon you now. Xinhua.

QUESTIONER: Thank you, Gerry, for taking my question. Maoling Xiong with Xinhua News Agency.

I want to ask both of you about fragmentation, the issue that the IMF has mentioned, that ‑‑ it highlighted the real risks of the world economy fragmenting further, and it could impede trade and capital flows and also weigh on the outlook and hinder climate cooperation.

Some people are talking about globalization in reverse. I wonder whether Chair Calviño and Managing Director Georgieva could share your thoughts on this, whether you think there is still reason to be optimistic about the future of globalization. Thank you.

Ms. Calviño: Well, three points from my side.

First of all, this is one of the issues that has been most intensively, extensively, and deeply discussed in the different meetings we have had. We had very good presentations by the staff of the IMF on the risks derived from trade fragmentation, and this has been addressed. And there has been a quite clear call to avoid the negative impact of this fragmentation, which would be particularly important for the most vulnerable countries. “The poorest of the poor” is an expression that has been used throughout these meetings.

At the same time, some members have voiced their security concerns on the need to rethink the way international trade was functioning in the past, in the wake of the very deep and significant geopolitical changes that are taking place, the tectonic shift that is taking place as we speak and that we need to tackle to address together.

And my third and final point was ‑‑ and you asked, is there any good news? Actually, we had very good news from the Chair of the WTO, that trade is actually increasing and that it is recovering the prepandemic levels. And so that reality is actually going in the direction of more trade. We now need to ensure that other actions by different jurisdictions do not endanger the positive drive, the positive impact of trade on global activity, prosperity, and job creation throughout the world. Yes.

Ms. Georgieva: It is, of course, a serious concern. We have seen a tendency to seek alternative ways to secure the necessary components for the functioning of a national economy. And there, my answer is in three parts.

One, yes, we are going to see some diversification of supplies. Why? Because we are now much more aware that supply chain interruptions ‑‑ not necessarily driven by political considerations but by climate disasters or pandemic ‑‑ require thinking of supply chains with more attention to the security of supply.

For quite some time, we were thinking about cost as the one and only determinant. That cannot anymore be the case. And, therefore, some increase of multiplicity of supplies, diversification of supplies is happening, and it is rational that this is happening.

My second point is that, nevertheless, there is a risk of geopolitical fragmentation and then geopolitics turning into geoeconomics, with negative impacts. And one of the strong ‑‑ the most important message that came on this was from emerging markets and developing countries, that have stressed that, for them, it is paramount that they have the opportunity to drive growth and employment on the basis of a more integrated global economy. That was also a message coming from small economies, small advanced economies. And, actually, the predominant mood in the room was, we cannot possibly allow fragmentation to happen because everybody would be poorer, but it would be devastating for low‑income and ‑‑ for emerging markets and developing economies.

One simulation presented this in the following way: For advanced economies, it would be a loss of 2 percent of output. For emerging markets and developing economies, it can be 10 to 15 percent. Now, this is not done scientifically. This is just one simulation. But if you look backwards, globalization, an integrated economy led to, in the last decades, to a tripling of the world economy in which emerging markets, developing economies quadrupled, and advanced economies doubled. So if we want to have a secure future, we do need to retain that efficiency that comes from an integrated economy.

And three ‑‑ and this is where the mandate of the Fund came, and it is quite strong ‑‑ a recognition that there are areas where only an integrated world can be effective. Climate, of course, but also cross‑border payments, the development of digital money and trade. And I would say there is ‑‑ I feel more confident that our job at the IMF is to continue to make the case, why it is in everybody’s interest and also recognize that some shifts are necessary, not pretend that they are not.

Remember globalization. It did not benefit everybody. But for quite some time, we kind of glossed over this. We cannot gloss over issues that are really serious. We have to recognize them and still work toward a more integrated world economy.

Mr. Rice: Thank you both again. I am going to turn to Stefania ‑‑ you were also very patient yesterday ‑‑ CNBC Italia.

QUESTIONER: Thank you for taking my question.

We all know the Italian result of politics but not only Italy. Are you worried about the rise of far right movements and, therefore, in this context, the risk of political and financial fragmentation?

Ms. Georgieva: I believe that what is happening has roots, and we need to address these roots. What are the roots of discontent? Why is it that people are looking for these platforms? Because, let’s be very straight on it, over the last years, inequality in the world has gone up. And it is also true that the attention to, even geographically, to parts of countries that are more depressed perhaps has not been as high as it needs to be.

So from the IMF’s point of view, we are not in politics; we were in economics. And what we look into is, what is it that has to be front and center? It is people. Policies are for people. They are not for the books. And are policies inclusive? Are they fair? This is what we need to concentrate on.

Ms. Calviño: I think, if I may add, the current environment is obviously one of slowing down growth, high cost of living or increasing cost of living in many parts of the world; deep changes that have to do with digitalization, climate change, also with the geopolitical shift which is going on; rising inequality in many of our countries, also. And this is an environment which is quite open to the messages of people that have very simple and totally ineffective and wrong solutions to complex matters.

In this regard, I think that the message that the Managing Director has shared and that has been, actually, shared by many members during the meetings ‑‑ that people matter and that they have to be at the center of our policies at the national level and at international level ‑‑ is a very strong one. That was shared by the members in the different meetings.

Mr. Rice: Thank you very much. I am actually going to call time because I know that Kristalina has to be somewhere at 2:55 ‑‑

Ms. Georgieva: One minute ago.

Mr. Rice: ‑‑ and Nadia has to catch a plane. So I apologize for cutting this one short, but we did go very long yesterday. And I am going to thank Nadia Calviño, our Chair of the IMFC, and Kristalina Georgieva.

Ms. Georgieva: Let’s take one more question. I feel like one more. The gentleman here has been like ‑‑

Mr. Rice: The moderator has been overruled.

Ms. Georgieva: I am overruling you. But a very short question, very short.

Mr. Rice: We are going to go to Egypt.

QUESTIONER: I would like to ask in Arabic, please.

Ms. Georgieva: In Arabic, OK. But short.

QUESTIONER: Sure.

[Through interpreter]

The Egyptian government has asked for a loan some seven months ago, as far as I remember, since the start of the Russian war ‑‑ the Ukrainian war. So what is the size of that loan? The discussions, debate between the IMF and the Egyptian authorities? We have been hearing that we are almost there, almost there, but nothing happens. As far as the value of the loan, the size of the loan. And when is it going to be released? And the discussions between the IMF and the Egyptian authorities. Thank you.

Ms. Georgieva: We are meeting with the Egyptian delegation tomorrow.

What I can say is that we have resolved the big policy issues. We are now working on much smaller technical details. And, yes, it has taken some time, but these are not trivial matters. It boils down to exchange rate policy in Egypt. It has to be thoughtfully designed. And, as you know, there has been also a change institutionally in Egypt, a change of the Governor of the Central Bank. So the new Governor does need to feel comfortable with where we are headed with the policy.

So short answer: Stay tuned. It is really at the finish line, to be crossed virtually within days. Yep? OK. Good.

Mr. Rice: Thank you, Kristalina. Thank you, Nadia. Thanks to all of you for coming today. See you soon.