Transcript

Transcript of IMFC Press Briefing: Annual Meetings, October 2024

October 25, 2024

Speakers:
Kristalina Georgieva, Managing Director, IMF
Mohammed Aljadaan, Chair, IMFC
Moderator:
Julie Kozack, Director of the Communications Department, IMF

Ms. Kozack: Good afternoon, everyone. Thank you for joining us this afternoon. My name is Julie Kozack. I'm the Director of communications at the IMF. Welcome to this press briefing of the IMFC. And I am delighted to have with us here today the Chair of the IMFC, His Excellency Mohammed Aljadaan, Minister of Finance of Saudi Arabia, and also our Managing Director, Kristalina Georgieva. They will first share with you a few takeaways from the IMFC meeting that just concluded, and then we will have time for your questions.

Your Excellency, the floor is yours.

Mr. Aljadaan: Thank you. Thank you very much, and thank you to all of you for being here. And thank you, Julie. Good afternoon, everyone.

I would like to thank all the IMFC members for their strong and focused collaboration. I would also like to congratulate Kristalina for her second term as Managing Director. We wish her every success. And I must say that personally, I would congratulate myself and the members for her accepting, actually, to spend the next five years with us.

It's important to note that the IMF was established 80 years ago at Bretton Woods. Since 1944, the world has changed dramatically, and the IMF and the World Bank have evolved along with that.

The evolution continues, as we respond to many challenges facing the global financial system. Above all, our approach seeks common ground to achieve the common good for all. The IMFC members are pleased to report that the global economy has moved closer to a soft landing. Global growth is steady, and inflation continues to moderate. However, progress has been uneven across members. There is uncertainty, with risks tilted to the downside; medium‑term growth prospects remain muted; and global public debt has reached a record high.

Going forward, we will work to further secure a soft landing, while stepping up our reform efforts to shift away from the low growth/high debt path.

I want to report on a few developments very quickly.

The IMFC members welcomed the completion of the review of the Poverty Reduction and Growth Trust, ensuring that the IMF is supporting low‑income countries to address balance of payments challenges. We encourage the IMF and the World Bank to further develop their proposal to support countries with sustainable debt but experiencing liquidity challenges. We supported the IMF's efforts to strengthen its capacity development assistance and to secure appropriate financing. We welcomed the new 25th chair in the IMF's Executive Board for sub‑Saharan Africa, which will strengthen the voice and the representation of the region. We also welcomed the new member, Liechtenstein, as our 191st member. That makes the IMF almost universal, short of possibly one or two members. And we reaffirmed our commitment to a strong, quota‑based, and adequately resourced IMF at the center of the Global Financial Safety Net.

We have secured or are working to secure domestic approvals for our consent to the quota increase under the Sixteenth General Review of Quotas by mid‑November this year, as well as relevant adjustments under the New Arrangements to Borrow.

Of particular importance is the commitment to improve the Common Framework for sovereign debt relief in low‑income countries so it is implemented in a more predictable, timely, and coordinated manner. Also, we appreciate the reforms of the Fund's lending toolkit, particularly for the PRGT.

Finally, I would note the review of the charges and the surcharges policy, which will alleviate the financial cost of the Fund's lending for borrowing countries, while preserving their intended incentives and safeguarding the Fund's financial soundness.

The IMFC has achieved some important milestones in this meeting. This shows that the IMF is essential to that spirit of multilateralism born at the Bretton Woods, as we seek common ground to assure progress and prosperity for all IMF members.

Now I will turn it to you, Your Excellency. Please, Kristalina.

Ms. Georgieva: Thank you very much. Thank you very much, Minister Aljadaan. Congratulations for chairing another very engaged, substantive, and successful meeting and, again, one that starts right on time and finishes on the dot. You bring this discipline symbolically, as we have no time to waste. There are very important topics to bring the membership together on.

You have presented the substance of the meeting and the achievements of the meeting. I would like to add to that three points.

First, to recognize the good balance that was achieved between confidence and caution. Confidence that the world economy has proven resilient. Inflation is in retreat. And this is being done without a risk of recession. Caution, that the problems that we need to address are still in front of us. They are complex. We have to attend to the concerns of people that maybe inflation is going down, but price levels are high. We have to recognize that in front of us is a prospect for low growth and high debt, a burden that is particularly heavy on low‑income countries, and that we are operating in an environment that is more impacted by forces of fragmentation. They are driven by wars that are happening and still going on. They are driven by security concerns in countries. They are driven by concerns about competitiveness.

And in this environment, the second observation I would like to make is the good balance between attention to the short‑term priorities and what needs to happen in the medium to long term. For the short term, the focus is on two things. One, how to‑‑for central banks to remain attentive, be evidence‑based, carefully monitor data to make sure that they don't cut either too early or too late, and that the monetary policy continues to be well communicated so expectations are anchored on the basis of this communication. And also, two, in the short term, a focus on the fiscal side as an immediate priority. Fiscal buffers have been exhausted, yet fiscal pressures are high. And that attention to medium‑term fiscal consolidation that starts now‑‑is not delayed‑‑came through for many of our members.

And in terms of the medium to long term, not surprisingly, a very substantive, deep discussion on what can be done to lift up growth prospects in countries; what can enhance productivity; what can be a factor for countries to achieve better outcomes for their people but also attention to the role a more vibrant global economy can play for this higher‑‑higher growth trajectory.

And my third point is going to be about debt. This was an issue that a majority of members addressed. Recognizing that you cannot‑‑actually, one of the Ministers quoted me from a previous engagement, me saying "you cannot borrow your way out of debt." The topic of debt was particularly important in terms of the work the Bank and the Fund are undertaking on our so‑called three‑pillar approach; and I want to update you on it, since it gained a lot of interest.

The three‑pillar approach we are proposing‑‑it is in the context of the Global Sovereign Debt Roundtable and the broader work on debt‑‑is to support countries that are not yet in a position that requires debt restructuring but are faced with significant liquidity problems that, if not addressed‑‑if they're not addressed, can turn into a risk for solvency in the future.

Pillar I, reforms to boost growth and mobilize domestic revenues. Pillar II, adequate financing, including from international financial institutions and a call on us to work together. Pillar III, crowding-in private financing at a lower cost.

I felt that that strong endorsement of this three‑pillar approach is going to give the Bank and the Fund the guidance and encouragement to do our best. You will see us identifying countries in which we apply that three‑pillar approach.

You walked us through all the important achievements. To us, the staff of the Fund, what we particularly cherish is that over the last months, we agreed on three historic firsts‑‑never done before. First time in our history, reaching our precautionary balances target. First time ever reducing charges and surcharges that would save $1.2 billion to borrowing members, a 36 percent reduction. First time deploying net income to boost our lending capacity for low‑income countries.

Mr. Aljadaan: Kristalina, I think this is just a very clear illustration that, despite all the discussion about fragmentation, three firsts are agreed by the members, very important firsts. So it just shows, really, that there is a lot of support to management and the Fund from the members.

Sorry, continue.

Ms. Georgieva: Oh, no. Thank you. And they have been agreed unanimously.

So my heart goes to all the staff of the Fund and all the members of the Fund. My gratitude to them. And a very special thanks to Brazil, Poland, Saudi Arabia, the UAE, and the U.S. for contributions to the PRGT; and the UAE for a contribution to the Resilience and Sustainability Trust. And I want to thank the U.K. for committing in the meeting to directly transfer its share of the GRA income distribution to the PRGT, and they called for others to follow.

So, all in all, what we can say is that the meeting demonstrates, when there are forces of fragmentation, bridges become even more important. And we, the IMF, we are a bridgebuilder. Thank you.

Ms. Kozack: Thank you very much, Minister, Managing Director. We will now turn to your questions. Please do raise your hand if you have a question, and please do identify yourself. Let's see. I'm going to start all the way over on this side of the room. There's a gentleman in the fourth row. Yep. Let's start there.

QUESTION: Good afternoon. Actually, I have two questions for today. My first question is for the Managing Director. As you reflect on the Annual Meetings, how do you assess the global economy, the main challenges and opportunities? My second question will be for Your Excellency, Minister Mohammed Aljadaan. What are the pressing IMFC issues and objectives for the coming years? Thank you.

Ms. Georgieva: Thank you for your question. The meetings have been very useful to see the unanimous understanding on the progress we have made and quite a close view across members on the challenges ahead.

The achievements in terms of bringing inflation down to open up, again, space for a reduction of interest rates that can contribute to better growth prospects in countries was recognized by a vast majority of our members. And at the same time, there was no sense of complacency. Why? Because the conditions of the world economy are good‑‑growth at 3.2 percent, inflation down‑‑but risks are tilted to the downside. And they are both in terms of the importance of monetary policy to remain vigilant and avoid a risk of misjudgment in the direction of interest rate policies and also risks that stem from a more fragmented world economy.

In terms of challenges, three stood out throughout the meetings.

First, the fiscal challenge. How to bring fiscal balance after these multiple shocks and years in which fiscal resources had to be deployed more actively? How to do that without undercutting prospects for investing in growth.

Second, how to identify and put in place structural reforms that can rapidly build prospects for higher productivity, higher growth in terms of labor market reforms, product market reforms, as well as reforms that can allow an acceleration of the green and digital transformation.

And three, how to build more resilience to future shocks. What we learned over these last years is that we are in a more shock‑prone world, and that requires building resilience in our economies for the future.

Ms. Kozack: Thank you. Minister.

Mr. Aljadaan: I will make it very quickly, actually, because they are very much related; so I will not repeat what the Managing Director has said. But the IMFC is basically the Governors' body of this institution. And the whole idea of the IMFC meeting is, A, to exchange views on, what can we then do together collectively, really, to help the world economy but also to give steer to the management of the institution. And that's really the point that you mentioned, whether it is ensuring that we actually do the last mile of dealing with inflation properly. Second is trying to ensure that we find ways out of the high debt/low growth and to more productivity growth and a more coordinated approach. We also wanted to make sure that we also provide the right support to the institution through finalizing our legislative approvals for the quota increase, making sure that we also provide the support that the Fund needs. And whether it is the PRGT or the trust fund or otherwise, I think there is the pure IMFC technical work that happens, but then there is a lot of coordination between management, the IMFC, and then the regional funds, multilateral development institutions; that we need to make sure that they all also connect.

Ms. Kozack: Very good. Thank you. All right. Let's go to the middle. I am going to go to the second row, gentleman, gray jacket, white shirt. Yep, you.

QUESTION: I thought I had grabbed the wrong jacket. Managing Director, it's been a long set of meetings. There are a lot of issues to get through, but one of the things that's been kind of hanging over this set of meetings has been the U.S. election. And I am just wondering if you could describe sort of how this has been discussed in these meetings, what you're thinking about it. And you know, there could be a major turn inward by the United States as a result of this. How do you avoid‑‑how do you deal with that? What do you tell people to do about it? Thank you.

Ms. Georgieva: The discussions ‑‑ we had a total of four meetings in different formats and themes. And the discussions in the meetings were about the problems we collectively face and how to go about them. In other words, the sentiment of the membership is, elections are for the American people. What is for us is to identify, what are the challenges and how the IMF can constructively address these challenges.

Mr. Aljadaan: I agree.

Ms. Georgieva: So, yeah‑‑

Mr. Aljadaan: Go ahead.

Ms. Georgieva: I was just going to say, it was what‑‑what are the problems of the world in advanced economies, in emerging markets, in low‑income countries? What can the IMF do to help different parts of the membership to address these problems?

Mr. Aljadaan: I think, basically, the institution ‑‑ I think there is a clear recognition the institution has, you know, existed for the last 80 years. It worked with multiple administrations from both sides and has managed to have a very good relationship with our host. So, we just need to make sure that we continue that dialogue.

Ms. Kozack: Very good. I will go to this side. Second row, gentleman in the gray shirt, at the end.

QUESTION: Good afternoon. My question is meant for the IMF MD. I would like to know what the IMF doing to increase Africa's voice on your Board. And like the Minister said earlier, they have added one more seat for Africa. I don't think that is enough. What are you doing that to raise that to maybe two or three? Thank you.

Ms. Georgieva: Thank you very much for this question.

The most significant step we have taken to increase the voice and representation of Africa is to add a third chair for sub‑Saharan Africa around the Board table at the Fund. So up to November 1, we have 24 Executive Directors, representing 190, soon to be 19‑‑well, no. There are already 191 members. And as of November 1, we will have 25 Executive Directors. That means that the sub‑Saharan African countries will have a better representation of their issues. And these are, as you know, that's a diverse group of countries. When we only have two Directors, that means constituencies that have 23, 22 countries, it is very difficult for this Executive Director to voice the concerns of each and every one of the members. Now they will have three Directors, and that brings them at par with other parts of the world. We have Executive Directors representing‑‑one represents 16 countries, another one representing 13. So now sub‑Saharan Africa is not going to be an outlier. And that would allow the‑‑and that, of course, means an Executive Director but also offices with advisors and Alternative Executive Directors from the constituency.

Beyond that, this is really important‑‑ So imagine you sit around this Board table, and now you have more voice.

Beyond that, there are two other things we do at the Fund. One is to work very hard to have diversity of our staff. So we actually are very proud. We set a target for sub‑Saharan Africa. We have exceeded it. So we have more people coming from this part of the world.

And the second one is how we engage with these countries. We have, over time, built offices in a number of countries, including training centers. And that brings us closer, makes it easier to hear the concerns of citizens and authorities.

Actually, next to us‑‑when we had the meetings, next to us was a proud son of Kenya.

Where is Ceda? Is he here, or no?

The Secretary of our Board is from Kenya. So Africa was very visible. We can say we had the Arab world. We had emerging markets, Europe; and we had Africa.

Mr. Aljadaan: I think, to be honest, Africa is very important. And it is not only about how many chairs in the Board that represent Africa. Actually, a lot of voices within the Board and there are a lot of voices within the IMFC, in the Governors‑‑even if they are not from Africa, they actually do a lot of work for Africa. And I can say, I am one of them. I have absolutely the full dedication to making sure low‑income countries, and particularly in Africa, are supported and provided ‑‑ not only financial support but also technical support to‑‑you know, for them to graduate from low‑income country status.

Ms. Georgieva: Yep. Half of the countries in sub‑Saharan Africa have programs with the Fund. And these programs are not just about the financing; they are about bringing capacity development, bringing excitement about growth for the future in these countries.

Ms. Kozack: And I know many of you have questions. Unfortunately, we do have to bring this press briefing to an end. I want to thank you very much for joining us today. The full transcript of this press briefing will be made available on our website. And of course, if you have further questions, please do reach out to my time at Media Relations. Thank you so much for joining us.