Transcript

Transcript of the April 2023 IMFC Press Briefing

April 14, 2023

Speakers:

Kristalina Georgieva, Managing Director, IMF

Nadia Calviño, IMFC Chair

Moderator:

Julie Kozack, Director of the Communications Department, IMF

Ms. KOZACK: OK. Good morning, everyone. Thank you for joining us, and welcome to this press briefing of the IMFC.

I am delighted to have with us Chair of the IMFC, First Vice President Nadia Calviño and, of course, our Managing Director, Kristalina Georgieva. They will share with you their key takeaways from the IMFC, and then we’ll have time for a few questions.

Nadia, over to you.

Ms. CALVIÑO: Thank you very much, Julie.

Good morning, everyone here at the IMF headquarters in Washington. Thank you very much for joining us today.

Over the week, we had very productive and constructive discussions. And the meeting, I think, concludes with a strong message of confidence and willingness to cooperate.

We have tried our best to reach a communiqué. Unfortunately, this has not been possible. Russia’s war against Ukraine continues to inflict economic and humanitarian losses for the global economy, as a whole, and it continues to be the single most important source of uncertainty around the world.

Once again, our teams have tried our best to reach an agreement on a communiqué. Unfortunately, there has been no unanimity around the Bali language on the war that was agreed by the G‑20 leaders. Fortunately, and most importantly, there is consensus on the core issues of the IMFC. And I have, therefore, issued a Chair’s Statement that shows agreement across the membership, on the importance of addressing our common challenges together.

In comparison to what we expected last fall, the global economy has proven more resilient, and the worst macroeconomic scenarios have not materialized. Throughout the last weeks, we have seen swift and decisive action, policy response by leading authorities around the world that has helped calm down financial markets. But, however, we all agreed that financial institutions, as well as fiscal and monetary policy authorities, must remain vigilant, monitor the situation closely, and act in a decisive and effective manner.

The global financial safety net has worked well so far. Lending programs to countries such as Ukraine and Sri Lanka, amongst others, prove that multilateral institutions are key to address the needs of vulnerable countries. Making progress on debt relief is of the essence; and I think this week has been particularly productive on this front, with a constructive engagement at the Global Sovereign Debt Roundtable. Progress has also been made by the numerous announcements of contributions to the Poverty Reduction and Growth Trust and the Resilience and Sustainability Trust and, thus, to the reinforcement to this financial global safety net.

Let me close with a more general reflection. Many of the circumstances we are living in are not unprecedented. We have seen wars and pandemics, inflationary pressures, financial instability, in the past. Let us keep in mind and learn the lessons of the past, the lessons that history teaches us, and not forget that peace and multilateralism -- as opposed to war and fragmentation -- have brought progress and prosperity to millions of people all around the world.

And I think this allows us today to close with a message of confidence to markets and citizens. These meetings conclude with an enhanced commitment by members to coordinate our economic policies, to reinforce our global financial safety net, and to work together in a constructive manner to deliver on our shared road map as we start the road to Marrakech. Thank you very much.

Ms. GEORGIEVA: Thank you. Thank you, Nadia.

I want to start by commending you for doing a fabulous job, chairing the IMFC. It was reflected by quite a number of the members during their interventions, that having women in charge helps reach consensus. I also want to recognize your team. You rallied the membership at a very challenging moment over the past year, and we know that we have a lot of work to do. So a great force for good. My deepest appreciation for it.

I am regretting there is no Chair’s Statement; but as you said, what we have is -- sorry -- we have no communiqué; but as you said, we have a Chair’s Statement that captures a very significant agreement among finance ministers and central bank governors, based on a frank and productive discussion.

As we talked through the ongoing impacts of the shocks of the past -- we had the pandemic, Russia’s war -- we also talked about the resilience we are building for the future. And I took from the meeting a can‑do attitude, and this is what matters.

Broad agreement in many areas. You talked about that. The need to continue to fight the fight against inflation, to safeguard financial stability, the need to work together now on steps that can boost growth potential in the years ahead, and the need to support our vulnerable members. I am very heartened by the support for the Global Policy Agenda we have represented, for the support for the IMF’s mission and our standing at the heart of the global financial safety net.

We have been leaning forward in these multiple crises. Since the start of the pandemic, we have approved close to 300 billion in new financing for 96 countries, and we all know that has never happened before in the history of the Fund. We also have been working on constantly improving our toolkit, tuning it to better support vulnerable countries, as we have done with the food shock window and the Resilience and Sustainability Trust.

As we discussed, there is an urgent need to beef up the resources of the Poverty Reduction and Growth Trust. It is a tried and tested instrument to provide zero interest rate support to low‑income countries. With demand at a record level and interest rates being high, if we do not secure additional resources, poor countries may not get the support they need. We have been calling for better‑off countries to close the funding gap. It is $4.7 billion for loan resources, $1.6 billion in subsidy resources. And quite a number of them stepped forward already.

I am so very grateful to the countries. I want to extend my deepest gratitude to those that spoke in this round. There were many that did support it before, and I know there will be many to support this in the future. But this time, Belgium, China, Ireland, Italy, Japan, Korea, Luxembourg, Portugal, Saudi Arabia, Switzerland, the U.K. And in that sense, I want to stress, this is for the PRGT, it is for the RST, and also for capacity development. We have narrowed the subsidy resource gap, and we basically are closing the loan gap, and I am very optimistic that we will get the job done by Marrakech.

The IMFC also supported the tangible progress we made on debt restructuring. I want to echo what Nadia said about the Global Sovereign Debt Roundtable. It is creating a framework that I am confident will help us to do much better in the future, and it is a necessity for the countries under a high level of debt. We reached a common understanding on the role the MDBs can play -- that was an outstanding issue -- by providing positive net flows. And we have identified what the Fund can do more, on information provision, and how we can work on a comparability of treatment.

So let me say, this is about principles; but principles, when they are put in practice, they mean that countries like Zambia, Ghana, Ethiopia, they can see resolution of their debt issues faster.

Finally, we cannot forgot that we have a deadline this year with the Sixteenth Quota Review. And I was very encouraged by what I heard from the membership. We are committed to successfully complete the review.

As we look forward to Marrakech, there will be plenty to do. There may be new surprises. We now know that we are in a fast‑moving, shock‑prone world, but we have the unity of the membership for us to work together to solve problems, as they come. Thank you very much.

Ms. KOZACK: Great. Thank you very much, First Vice President and Managing Director.

We will now turn to you for your questions. Thank you. Let’s go over here, the woman in the white jacket.

QUESTION: Thank you. Paula Escalada from EFE news.

We see there is no communiqué. But do you feel any approach between the countries, if you compare this meeting with the previous ones?

And you also mentioned the Poverty Reduction and Growth [Facility]. How can we ensure this vehicle keeps helping low‑income countries? Thank you.

Ms. CALVIÑO: Well, I think that, as the war goes on, obviously, the impact on the economic situation is felt throughout the world. And the discussions have been constructive. There was agreement on almost the whole communiqué. The only element, not bringing a consensus, precisely the language that we had agreed in Bali -- leaders had agreed in Bali to refer to the war. So I think that the encouraging element here is the unanimous agreement on the core issues of the IMFC and, in particular, on the need to ensure that the global financial safety net works for most vulnerable countries.

All members that have spoken up -- I think, Kristalina -- all of them referred to the need to ensure that the Fund is adequately funded so that there is a capability, an ability to support countries.

And there are two lines of work that I think -- where we have made progress in the course of the week. First of all, in the endowment of the Poverty Reduction and Growth Trust, as well as the Resilience and Sustainability Trust, which are instrumental for supporting low‑income countries and also middle‑income countries, in ensuring that they are more resilient going forward in the areas of health, in the areas of climate change, et cetera. And the second line of work is this debt relief part where, on top of progress on the Common Framework under the G‑20 umbrella, there was this [Common] Sovereign Debt Roundtable, which brought together the two Bretton Woods Institutions, plus the G‑20, I think in a very constructive environment, key stakeholders, private creditors and some of the countries that the Managing Director has mentioned. And there was a renewed commitment to making progress and providing debt relief to these countries as soon as possible.

Ms. KOZACK: Let’s go right here, the gentleman in the black jacket.

QUESTION: Thank you, Julie. My name is Godfrey Mutizwa. I am editor at CNBC Africa in Johannesburg.

The first question I will address to the Chair, around the need for reform of the IMF and increasing the voice of the continent. The perception continues that the continent continues to be marginalized. Your comment around that.

MD, you spoke about debt restructuring. We know you have identified a number of African countries, I think more than 20 that are near or in danger of debt distress. I wanted to know, one, if you’ve got a target in terms of reaching an agreement on resolution. Zambia has been waiting for more than a year. And then secondly, if you have perhaps a number, on the number of countries that might need debt restructuring this year. Thank you.

Ms. CALVIÑO: Well, as the Managing Director already said, I think the words and the tone we heard today are encouraging on the quota review. There was a positive approach on the need for the Fund to be appropriately resourced and also for the voices of the different participants to be well‑balanced. I think the language and the tone, the approach in this meeting has been particularly encouraging, and we will work hard to make as much progress as possible, as soon as possible.

And I think also that there cannot be a stronger voice than having the Annual Meetings in Marrakech. So we will do our utmost to deliver on the road to Marrakech so that it is a successful Annual Meetings that works, in particular, for Africa.

Ms. GEORGIEVA: Thank you for your questions.

I just want to add, on the issue of representation, that we have to relentlessly work toward giving more voice. And there are many ways in which countries get more voice. Of course, the basics is quotas. The problem for many small economies, especially poor small economies, is that their share in the world economy is such that it does not -- it may even threaten them to lose quotas, rather than gain quotas, given that, unfortunately, a dangerous divergence is bringing some of these countries down, rather than them going up. So on that, we do have an agreement in principle. And I hope it will translate into the package that these countries will be protected. If there are any shifts, they are not going to be the ones to lose voice, to lose quotas.

But also, we need to think of engaging countries in a way that they can speak for themselves. For example, one of the innovations in the Global Sovereign Debt Roundtable is that the debtor countries have equal sitting around that new table. They can speak for themselves. They can speak on behalf of others.

To your question on debt restructuring. Right now, we have -- as you know, we have the case of Zambia. Well, let me start from Chad. That is resolved. Zambia, Ethiopia, Ghana. We also have some middle‑income countries -- Sri Lanka, Suriname -- where there is a burden of debt that requires restructuring. I very much hope that we will take proactively steps to prevent the need from restructuring by reprofiling debt early, by providing financial support to countries so they can step up economic activities. And then in this case, we would avoid a more massive debt restructuring process.

We have to be, of course, prepared, should global conditions worsen. Imagine a further tightening of financial conditions, that increases the burden on these countries. But my --

I have been speaking about that a lot. Please, let’s act before the situation becomes dire. And the Fund will continue to work with this group of 20 countries -- 20 or so countries you mentioned -- so we avoid getting to a point where restructuring is the only way out.

Ms. KOZACK: We have time for one last question. Let’s go to the middle of the room, the woman in the gray blazer right in the front. Yes. Thank you.

QUESTION: Hi. Sophie Xiang from 21st Century Business Herald, China.

Talking about helping the developing countries and emerging markets, my question is about the IMF’s new lending facility, the RST. We know it’s already in operation. So how do you assess the progress now? When more countries on other institutions will join in, as you mentioned, a few countries before. And what are the hardest parts of your work now? And how do we go further? Thank you.

Ms. GEORGIEVA: Thank you for your question. We have created the Resilience and Sustainability Trust in response to a demand from the membership for the IMF to support structural transformation, as well as to help countries with the new challenges that have emerged, like pandemic preparedness. At this point, the demand is primarily for structural transformation to adapt to climate change and to take the green transition forward.

We have already completed arrangements for five countries. This is quite remarkable, given that just slightly over a year ago, that was just a dream. And now we have it, and we have five countries crossing the finish line. We have about 44 countries that have expressed interest. So our --

When you asked me about, what is your top priority? Our top priority is to gear up working in partnership with the World Bank and others on policy programs to move faster in responding to this very strong demand.

I want to tell you very clearly; we have no intention to be imprudent. We want to do meaningful programs with countries. And that means that we might have to -- we might have to stage the response to these requests.

In terms of funding, we got pledges for $40 billion. And actually, today we got some additional pledges, meaning that there is a very good likelihood that we can build it even further in terms of financial strength.

The critical issue is how the Fund can deploy its core expertise -- which is in macro policies, fiscal policy, monetary policy, structural reforms -- to that particular topic of resilience to climate shocks and advancing the green transition. And I am very optimistic that we will see programs that actually do help countries in that regard.

My final point on the question of the RST is that it is an instrument best deployed in collaboration with others. And this is why we work very closely with the World Bank, in particular, but also with the regional development banks -- so we can enhance the impact through collaboration.

Ms. KOZACK: Wonderful. I know many of you have questions; but unfortunately, this will have to conclude our press briefing. Thank you all so much for joining us.

Two housekeeping issues. The transcript will be available later today on imf.org. If you have any questions, please reach out to our media relations team.

And finally, we look very much forward to seeing you all in Marrakech. Thank you.

Ms. GEORGIEVA: Thank you very much, everybody.