V20 Ministerial Dialogue X Statement delivered by Ms. Kristalina Georgieva, Managing Director, IMF
V20 MINISTERIAL DIALOGUE X
16 April 2023
Ms. Kristalina Georgieva, Managing Director, IMF
Very good morning to everyone. Welcome to the IMF. We are very proud to be your physical host but, also, to add our skills, resources, and commitment to the objectives of V20.
Let me start by saying, as an Orthodox Christian, it is Easter today for me. And celebrating Easter is so uplifting because it is about renewal. It is about hope. And in that sense, I could not think of a better book to be put in front of us – Not Too Late.
Mandela would say be guided by your hopes, not by your fears; and I want to speak in that spirit. Yes, we do have a crisis. The Minister of Finance of Madagascar said during these meetings, “We’re at the war, not with each other, we are at the war with the climate crisis, and we have to treat it with that seriousness and at the same time our objective is to muster the will, the resources, the capacity to win that war.”
So, how do we see it from the perspective of the IMF? And I would reflect a bit on the discussions we had this week during the spring meetings.
First, we recognize that it has been a turbulent time. Over the last years, we have gone from one shock to another. Climate shocks were ever more present. Those affected by Cyclone Freddy, most recently, know what it is; but so is Pakistan; so is the Sahel; so is California in the United States with the forest fires. We can look around and see that we have to rethink the way we integrate shocks in our economic concepts and bring forward resilience as a fundamental objective to secure growth, prosperity, and improvements in the lives of people.
We are projecting low growth rates for the next five years, 3%. This is in contrast to 3.8% in the last two decades; but it’s not just the speed of growth, it is also the quality of growth we need to be very concerned about. And when we think about resilience, here at the IMF, we recognize that our job is to work with our members for macroeconomic financial stability, growth, and employment. We cannot achieve this objective if we ignore these factors that undermine our stability; and, of course, climate is a big part of it. And that our way of defining resilience has to be more comprehensive than it was in our history when it would be narrowly focused on financial sector, banking sector resilience, of course, they matter tremendously, and fiscal parameters.
We have to think about the resilience of people that are educated, healthy, that have good social protection under their feet. We have to think about the resilience of society, not just the economy, that the social fabric is strong. So when a shock hits, it can withstand better than otherwise. And of course, we need to think about the resilience of our planet. So, that concept of resilience is what, I believe, we can enhance with the tools and language of economics ‑‑ and you have my commitment, this of my staff, that we will continue to work relentlessly in this regard.
Secondly, we need resources. What we are seeing, unfortunately, is that fiscal capacity in countries is very limited, access to capital markets, right now, for many countries, gone, and development finance is struggling to catch up with the needs that are out there. So, we translate that into funding two big areas of work.
One, debt. If precious resources are sucked to serve that, which has become more expensive to do because of interest rates going up and staying higher for longer, countries would be not well served. Therefore, we take very seriously our obligation as an institution to work with the World Bank, to work with the G20 on accelerating that resolution, [and] setting up clear principles. We have one of the big achievements this week is the creation of the global sovereign debt roundtable, [which] brings traditional public creditors, new creditors, private sector, and the debt of countries. Ken was there, not just for Ghana but to represent that voice, so we can advance faster and more effectively, resolution and prevent debt from building up to begin with which is, of course, where the Fund is very engaged in reforms in countries.
Second, mobilize finance. Let’s face it, concessional finance is critical for countries to deal with the multiplicity of challenges and concessional finance is not on the scale it has to be. At the Fund, we have a concessional instrument called Poverty Reduction and Growth Trust. We are calling for, there is a subsidy gap, there is a lending gap, we want to close this gap by the annual meetings in Marrakech; and this week we made progress. The gap was $1.6 billion at the beginning of the week. It is now $1.2 and we will drive it down; and we almost, practically, closed the loan resource gap during the week.
We also, as you know, we have created an instrument specifically to underpin the structural transformation for resilience to climate shocks and low carbon development, the Resilience and Sustainability Trust. During the week, we got some of our members coming forward with more resources for it – we have $40 billion. We are seeing some indications that may go up. Five countries have already benefited. A sixth one is on the way. Forty-four countries are in the queue. And it is so important that we all recognize our responsibility to do what is necessary so financing comes on scale.
It would make a difference only if it helps move private finance. There is plenty of money. One thing that we are not short of is liquidity in the world but how do we make it go where it is necessary? And this is really the main preoccupation we had with the RST and more broadly, with our work at the IMF: How we can make conditions for private finance in developing countries, especially in vulnerable countries such that that move of money actually happens.
My conclusion today is to say the following. It is each and every one of us to step forward and support vulnerable countries. We have made vulnerability finally a factor in allocation of concessional finance, and I’m proud we’re the first institution to do it. If we all do what we can and then we do a bit more, then we can make a difference. And we heard this young woman, she said something that I’m sure we will be quoting her on that, let’s remember we’re supposed to be humankind. Can we be kind to each other and kind to our planet? Thank you.