Transcript

Transcript of a Press Conference of the Chair of the Intergovernmental Group of Twenty Four (G24) on International Monetary Affairs and Development

April 13, 2023

PARTICIPANTS:

Moderator:

PAVIS DEVAHASADIN, Communications Officer, IMF

Speakers:

ADAMA COULIBALY, Minister of Economy and Finance, Côte d’ Ivoire

G-24 Chair

BENJAMIN E. DIOKNO, Secretary of Finance of the Philippines

G-24 1st Vice Chair

CANDELARIA ALVAREZ MORONI, Undersecretary for International Coordination and Management, Ministry of Economy, Argentina

G-24 2nd Vice Chair

IYABO MASHA

Director G-24 Secretariat

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P R O C E E D I N G S

MR. DEVAHASADIN: Good afternoon, ladies and gentlemen. I’m Pavis Devahasadin from the Communications Department of IMF. I would like to welcome everyone here in the room and our online audience to the Press Conference of the Intergovernmental Group of 24 on International Monetary Affairs and Development, or G-24.

Before we begin, I would like to remind you that we have simultaneous translation in English and in French. Some portion of this press conference will be in French. It is my honor to introduce the distinguished panel at the table. The Chairman of the Ministers of the G-24, at the center, is Mr. Adama Coulibaly, Minister of Economy and Finance from Côte d'Ivoire. To his right is 1st Vice Chair, Mr. Benjamin Diokno, Secretary of the Department of Finance, the Philippines; and to the left of Mr. Chairman is Ms. Candelaria Alvarez Moroni, Undersecretary for International Coordination and Management from the Ministry of Economy, Argentina; and to the far end is the Director of G-24 Secretariat, Ms. Iyabo Masha.

Without further ado, may I invite Mr. Chairman to give some remarks. Thank you.

MR. COULIBALY: Ladies and gentlemen of the media. Let me welcome all of you to this press conference. At our meeting today, we noted the multiple crisis and shocks that overlap in the world economy and threaten global stability. COVID is fading but economies are recovering slowly. Inflation has surged, with food insecurity at an all-time high. More countries are already at risk of debt distress or close. Interest rates are rising, driving capital movement, and raising financing risks particularly for developing countries. Monetary policy decisions in Advanced Economies are creating risks for financial stability, and possible contagion. Human development is suffering major setbacks as a consequence of compound multiple crises. You have our communique and press release reflecting those discussions but let me touch briefly on the salient points.

We welcomed the efforts of IMF to improve

global liquidity through new instruments as well as revisions to the access limit on existing instruments. We are however of the view that given the magnitude of these risks, more needs to be done, especially for developing countries.

We continue to stress the importance of a

strong Global Financial Safety Net, with a quota-based, adequately resourced IMF at its center. We reiterate our call for the completion of the IMF 16th General Review of Quotas, including an agreement on a revised quota timeline. The revised quota formula should further shift quota shares from advanced economies to dynamic EMDEs to better reflect their growing weight in the global economy, while protecting the quota shares and voice of poor countries.

On the World Bank Group, we welcomed the ongoing discussions on its Evolution. We reaffirm the centrality of the twin goals of ending extreme poverty and promoting shared prosperity, while supporting developing countries to achieve the SDGs. In addition to climate change, conflict and fragility, and pandemic preparedness and prevention, we urged the WBG to scale up support for access to affordable water and energy, human capital development, digital development and debt sustainability.

On debt, we called for urgent global action to support developing countries to manage worsening debt vulnerabilities. We called for strengthening of the G20 Common Framework, so that it can deliver timely debt resolution to countries and avoid a debt crisis that retards sustainable and inclusive growth. On climate, we called for all countries to implement their Nationally Determined Contributions under the Paris Climate Agreement, and for the scaling up of climate finance.

On taxation, we stress the importance of international tax cooperation to develop fair tax rules and provide resources necessary to invest in economic recovery, climate action and the SDGs, and we support the UN General Assembly resolution on Inclusive and Efficient Tax Reform Initiative in this regard.

Finally, we expressed concern about rising trade protectionism and slow progress in global trading system reforms. We urged support for the WTO in the design of a robust multilateral trade system that benefits all to strengthen the contribution of trade to the global economy.

With that, I will open the floor to questions.

MR. DEVAHASADIN: May I remind you to identify yourself, your organization, affiliation, and specify to whom your question will address. Let me begin with the lady in the green from 21st Century Business Herald. Thank you.

QUESTIONER: Hi. Sorry, I can’t speak French. I speak in English. I’m Sophie Xiang from 21st Century Business Herald. Can you please share more details about the discussion related to the IMF quota reform and World Bank evolution roadmap? What is the position of the developing country? In what direction do they want the reform to go, and what are the obstacles right now? Is there any plan for further progress? Thank you.

MR. COULIBALY: Thank you very much. It’s a two-pronged question. The first has to do with the general review of quotas. Indeed, quotas are being discussed as part of the 16-general review of quotas at the IMF. We had thorough discussions on this matter. We believe that the issue of quotas has to go in line with the strengthening of IMF governance.

As you know, the IMF has done much since the beginning of the COVID-19 crisis by providing G-24 countries with access to new instruments like the food shock window, the Resilience and Sustainability Trust. However, we said that it was important to make efforts to ensure that countries with higher access could benefit from that.

Regarding quotas, as you know, Africa has 1.4 billion inhabitants. The quotas of African countries at the IMF amount to $24 billion. Some countries with less than 100 million people have about twice the weight of Africa, as a continent, in terms of quotas. That’s why we requested an increase in the quotas of African countries with strengthened governance and an additional share at the IMF Board. This should not be to the detriment of countries who are already represented by a director at the IMF’s Board. It’s just a matter of fairness and equity to ensure higher representation that is tailored to the economic weight of African countries.

We have emerging countries in Africa, and it’s important that those countries have a weight in the IMF governance structure that’s in line with their economic weight.

As for the World Bank’s evolution roadmap, we have studied this matter. We believe that the World Bank is doing work that deserves to be commended. We believe that the World Bank should rather focus on supporting countries to reach the sustainable development goals. That’s important to us. The focus should be put on access to affordable water and energy because that’s a key to attaining the SDGs.

We also believe that the World Bank, as reference lender, needs to strengthen its means of intervention, and that could be done through various means and mechanisms. The World Bank is rated Triple A. This should allow it to raise low-cost resources and put them at the disposal of countries. In addition, the World Bank should optimize its balance sheets. It should reduce transaction costs on trusts. If it does all of this, the World Bank will have all the necessary resources to fund the most important programs for G-24 countries. So, that’s what I had to say on your two-pronged question. Thank you.

MR. DEVAHASADIN: And then you in the front, please; thank you.

QUESTIONER: My name is Shabtai Gold. I’m with Devex. I wanted to specifically focus on the World Bank reforms and what exactly is the position of the G-24 as it relates to further lowering the equity to loan ratio which could allow additional lending by the Bank and other reform measures that could free up more capital; and are you calling for a capital increase, particularly by the wealthiest countries? Thank you.

MR. DEVAHASADIN: And I believe that was for Mr. Chairman, or any of you. We’ll let Mr. Chairman and any of you panelist to answer first and then we move on to your question.

MR. COULIBALY: As I was saying, the World Bank is a reference lender. It plays an extremely important role in allowing countries to gain access, especially developing countries that are G-24 members. We believe that the World Bank should be able to raise resources at a low cost and lend them at concessional terms, especially in the current context with rising interest rates on markets. This is in line with what I already mentioned previously, which is optimizing World Bank balance sheets.

The World Bank has various means to increase its equity in order to support countries in need. It’s also clear that when it comes to reforms, resources are linked to organization mandates. The G-24 is watching this very closely. We are looking at eligibility criteria that could lead the World Bank to selecting some intervention criteria. For us, human capital development is extremely important, and this is the link to mandates; and the latter are linked to resources.

Digital development is equally important because everything depends on the digital era; and we also need resources to meet the needs of our countries. There is also an important matter that has to do with debt sustainability. The World Bank has been working on that increasingly; and we encourage it to do so with the IMF to prevent a new debt crisis. So, we support the ongoing reforms, and we are watching the discussions closely, looking forward to the conclusions. Thank you.

MR. DEVAHASADIN: The Vice Chairs, do you have anything to add?

QUESTIONER: I’m going to speak in French. You spoke about strengthening the G-20 common framework. What details can you give us regarding the strengthening? You also spoke about tax reform. Two years ago, during the pandemic, African countries and developing countries asked the IMF to be more flexible regarding the budget deficit figures, and President Ouattara was the spokesperson of that pleading. I’d like to know whether the G-24 is supporting this request of the IMF to be more flexible in the case of developing countries in order to improve the budget. Thank you.

MR. COULIBALY: The common framework was created in order to enable the creditors to come to an agreement with the countries in order to deal with the debt matter in harmony. Unfortunately, we’ve seen that many creditors did not support and participate in the common framework which has limited the impact of this framework. What is necessary is for all creditors to join the group in order to work together within the common framework so that once the problem’s solved, it would be solved for everybody. It’s not normal that a creditor who does not participate in the framework can use resources that other creditors are using. I’m not going to name any name, but it would be good for all creditors to join the common framework, including the private sector, because we can work within the common framework without taking into account the private sector while the public debt is managed by the multilateral institutions, but you still have a huge debt stock due to debt with a private sector.

Regarding tax management, it’s important, and you can see it in the communique. International tax regime has to be reviewed in order to release resources, in order to finance economy growth. You know, U.N. has taken the initiative to launch what is called the global solution, which should be joined by everybody, supported by everybody. And that global solution would allow for a larger participation of all actors in negotiations, in cooperation regarding international tax regimes, so that all the tax problems could be managed through digitalization. And the new resources, the resources released through digitalization could be used to improve the economy growth.

You linked it to the very delicate matter of budget deficit. Since Covid, many countries have faced problems which deepened with the Ukraine crisis. So, then all countries are not only the G-20 or G-24 countries, most countries have modified the convergence criteria in order to allow for more deficit within reasonable limits. Of course, we have requested a flexibility, but it's not the G-24 which requested flexibility. All countries saw that those succession of shocks had provoked a succession of deficit of the country's budget. And it's quite normal to control deficit, but a deficit, if you don't do it, you are going to go deeper in debt. We're talking about indebtedness, we're talking about new resources, but if your deficit is too high, you are going to fall into indebtedness.

So, we need resources to finance development and investment, but we have to manage it while maintaining the debt sustainability. President Ouattara, he talked about the matter a lot, and he said that in view of real difficulties, which are exogenous in nature, we have to accept that temporarily there is a deficit and improve situation later on. That's what I can say. Thank you.

MR. DEVAHASADIN: The lady in the fourth row, please.

QUESTIONER: Hi. Thank you. This is Keisha from Business World, and I would like to know more about the Asian country's position in the G-24 statement that you delivered right now. So, on that, how do, how will Asian countries manage debt vulnerabilities, and how do you, or what can institutions and countries do to avoid a debt crisis while also keeping in mind inclusive growth? And what are the biggest challenges facing Asian countries this year? Thank you.

MR. DIOKNO: Well, it's difficult to talk of Asian countries as a homogeneous group because as you know, they're, they have very divergent characteristics. In fact, that's the point raised, explained by the IMF Managing Director, Georgieva. First of all, she said, the behavior of the developed countries, that's different from the behavior of the emerging and developing economies. And within the emerging and developing economies, there's divergence. Some would tend to do much better than the others. Like, I think she mentioned the developing Asia and the Middle East, who will probably do much better than say Africa and parts of Latin America.

But if you compare the emerging economists with the developed economies, I think that the emerging economies as a group will do much better in the next five years. Because in fact, she downgraded the developed economies from a growth rate of 3 percent to 2.8 percent this year. And she said it'll probably perform something like 3 percent for the next five years. So, as you know, there are some really fast performing countries in Southeast Asia, say, Vietnam, Indonesia, the Philippines, but that's not really the case in other Asian countries.

So, I think the general theme is that if you can, you have to raise your buffers, okay. Fiscal consolidation if you can, given the crisis, because we don't know what will the future bear, right. So, she's painting a very uncertain future. So, if you can raise your buffers.

MR. DEVAHASADIN: Okay. Thank you, Mr. Vice chair. Please allow me to move to the back of the room. The gentleman in the back, in the blue jacket, please.

QUESTIONER: Yes. Thank you very much. Erwan Lucas, I'm with AFP. I will ask my question in French for Mr. Coulibaly. Mr. Coulibaly, I would like to know if there is a common position of the G-24 regarding the next candidate of the World Bank. And what do you think about how the Bank should act regarding the counties in energy transition regarding climate change? Thank you.

MR. COULIBALY: We welcome the future, well, the candidate, let's say to as president of the World Bank. And I have to say the G-24 welcomed the efforts of the previous president, Mr. Malpass, who had to work in very difficult conditions. As you know, in the last three years, the world was facing huge uncertainty. And the last series of President Malpass took place within this very, very difficult context. And we thanked him for all the support he gave to the G-24.

As G-24, we would like to say that the transition energy transition would be smooth, and we are willing to work with the new president in order to help him to succeed in the fields where we are. We have expectations from the World Bank. As we said, we need to prepare for the future crisis. We don't know what's going to happen.

Before Covid, as you know, we had problems in Central Africa and then in West Africa. Today, we have Covid, war in Ukraine, climate change, and we don't know what's going to happen in the future. So, it will be very important for us that World Bank would help the G-24 countries to prepare to improve their resilience in view of a possible future crisis.

As we've seen, we have low-income countries, you have island countries, which did not contribute a lot to the climate change, but the disasters have a huge impact on those countries. Disasters due to climate change have a huge impact on those countries, and we expect that World Bank will make investment in order to help the countries to adapt to the future. And could go through the energy transition.

And then there is development of human capital. Africa is a young continent. Over 60 percent of the African country population is under 35 years of age. So, you need to educate that population and to offer it employment. And we have expectation regarding what the World Bank or even the IMF could do in order to support us.

Also, I mentioned the matter of the digital economy. The Bank is already working a lot and it should be able to improve and strengthen its actions regarding digitalization of economies. And then there is the matter of large infrastructure, regional integration. And in all those fields, we have expectations from the World Bank and the G-24 countries are willing to support the new incoming president of the World Bank.

We are willing to support him because we know we have to have targeted actions. The World Bank for us is a reference lender, a preferred lender with which offers concessional resources at conditions we cannot get on the financial markets. That's what I could tell regarding the new president. And we hope the transition will be as smooth as possible. Thank you.

MR. DEVAHASADIN: And I think we have the time for two more questions before we have to wrap this up. And gentleman in the blue jacket here, and then you in the front. Thank you.

QUESTIONER: Hello. I am Maxwell Adam from Ghana. Mr. Chair, the food shock is really of grave concern to Africa and West African, in particular. And the World Bank, the IMF estimate there are about 140 million people risk facing food insecurity. But it's also coming at a time inflation is very high and central banks are pushing up rates to be able to contain it. And that impacts the livelihoods and people's lives. And it increases the risk that the food shock brings to people.

At individual country stages, what are you doing to mitigate it? Given that cash transfers, which is recommended by IMF and World Bank also has a challenge because of corruption related issues.

And then, on the issue of trade, using the Africa free, continental free trade as an example, how have we fared with that, since that we now ask for global support? Thank you.

MR. DEVAHASADIN: Thank you. And if I may ask you to ask your question. Microphone, please. Yeah, right here, the lady in the front.

QUESTIONER: Thank you. Hi, I'm from the Africa Bazaar Magazine. I was wondering if you -- you talk about taxes, you talk about trade, and you also mentioned that you are holding the WTO to support trade that will benefit all countries. I was wondering when we talk about taxes, a huge part of where those taxes come from is the labor market. So, how do you plan to strengthen the labor market, for example, in Africa, where, as you mentioned majority of the population are under 35 years old and is a huge unemployment as well as in other developing country. So, how do you plan to strengthen the labor market to be able to improve the overall economic?

The other aspect of it is we have a huge informal market. How do you plan to integrate that, that will benefit trade as well as move the nations in the G-24 into the global economic? Thank you.

MR. DEVAHASADIN: Thank you. So, the first question was about the cash transfer in light of food insecurity, and then we can talk about the strengthening labor markets. Mr. Chairman or any Vice Chairs, brief answers, please. Thank you.

MR. COULIBALY: Okay. I would like to thank our friend from Ghana. He talked about the food shocks. Indeed, they are important and a source of concern, but there is a great level of awareness on that matter. We have addressed that in our communique, and it has also been raised in several discussions. The IMF setup a food shock window. Six countries have already benefited from resources under that facility.

Therefore, at the global level, we know that current shocks are linked to uncontrolled phenomenon globally and regionally. So, we know that things will improve. However, the awareness raises questions of conscience. Countries that are essentially agricultural shouldn't be facing a food shock as soon as there is a global issue. So, efforts are being made to develop local production to shield countries from breakdowns in global supply of food.

So, there is an ongoing reflection on that matter. You also talked about remittances and cash transfers. Countries are not in the same situation. There are two economic zones in Africa. They are working and are harmonizing payment systems that will facilitate trade. Sometimes two neighboring countries have difficulty making a transfer and they have to turn to a correspondent that's outside of the country and that's detrimental to the continent. And that's why the Free Trade Continental Zone was created. And you've mentioned it and we hope that it's going to be development engine.

Now, regarding labor markets, labor markets have become a major element because there is an issue of education, of vocational training and employment in many countries. People used to think that they needed to study for a long time in order to have a job, but a focus is being put on vocational training to improve employment opportunities. And the same applies to the informal sector.

In many countries, we believe that we do not have the skilled labor that people need. How to improve the situation of the informal sector to raise taxes. For example, in Côte d'Ivoire, we are trying to encourage the informal sector to integrate the formal economy. Thanks to incentives. We are also creating economic opportunities to facilitate that integration. We are aware of the fact that trade is important for the continent development overall. I hope to have answered all of your questions. I hope I did.

MR. DEVAHASADIN: Thank you for joining the press conference here and those who watch online. The G-24 communique will be posted on IMF.org, and the transcription of this press briefing will be also posted later. Have a good rest of your day. Thank you very much.

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