Abuja, July 19, 2023: Kristalina Georgieva, Managing Director, International Monetary Fund (IMF) has urged the G20 leadership to strengthen the global financial safety net.
A statement issued by the IMF Press Centre on Tuesday said Georgieva made the call at the third meeting of the G20 Finance Ministers and Central Bank Governors in Gandhinagar, India.
She said there was the need to recognise that the world today was more shock-prone and fragile, with climate change, pandemics, and Russia’s invasion of Ukraine all causing widespread turmoil.
Georgieva said resilience to shocks was not evenly distributed, adding that some countries were in a better position to protect their people than others.
” So what are the top priorities for G20 countries?
“To protect the most vulnerable countries and their people, we need to strengthen the global financial safety net.
“While advanced and strong emerging market economies have a cushion of more than 10 trillion dollars in international reserves, the rest of the world relies on pooled resources of international institutions such as the IMF.
She said though the IMF had nearly one trillion dollars in lending capacity, the quota resources which were critical to ensure the predictability of the fund’s firepower had shrunk in relative terms.
“I appeal to G20 countries to restore the primacy of IMF quota resources by successfully completing the 16th quota review by the end of this year.
“With our support for low-income countries having quadrupled in recent years and demand still high, the IMF urgently needs to replenish subsidy resources in the Poverty Reduction and Growth Trust (PRGT).
“I call on the G20 to close the PRGT’s subsidy gap and put it on a sustainable footing for the future, including by exploring options for using the IMF’s internal resources. ”
The managing director said the IMF’s newest instrument, the Resilience and Sustainability Trust (RST), had been funded through on-lending Special Drawing Rights(SDRs).
According to her, this is a great innovation that transforms a ‘sleeping asset’ of countries in strong positions into firepower to support vulnerable countries.
Georgieva said the G20 had reached its target of committing 100 billion dollars for SDR channeling to vulnerable countries.
“For the IMF, this has mobilised 45 billion dollars for the PRGT and 42 billion dollars for the RST. Let us work together to increase the firepower of the RST.”
She earlier called on the G20 leaders to move the global economy onto a more vibrant medium-term path saying this requires both domestic and international policy action.
On domestic policy action, she said the top priority was to durably bring inflation down, rebuild fiscal buffers and focus on growth-enhancing reforms needed to boost productivity and living standards.
” To support these reform efforts, the fund will also expand its work on mobilising domestic resources and improving the quality of country spending. ”
Georgieva said the fund would also build deep capital markets and improve the environment for private investment, both domestic and foreign.
” So we have work to do. Our world may be wealthier today than when the current international financial architecture was established, but it is also more fragile.
“The global economy has shown resilience, but this resilience is not evenly distributed.
“With domestic policy actions to durably brighten growth prospects and international action to support the most vulnerable members of our global community, we can achieve a more vibrant and inclusive future. ”
The G20 is an intergovernmental forum comprising 19 countries and the European Union (EU) working to address major issues related to the global economy.
The countries include Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, Republic of Korea, Turkey, the United Kingdom, and the United States of America.
