The International Monetary Fund (IMF), says strong policy action and pragmatic approaches are needed to find areas of common ground to respond to shared challenges.
Ms Kristalina Georgieva, the Managing Director, IMF said this at a news briefing on “Global Policy Agenda for the Spring Meetings 2023: Safeguard Economic Stability, Support Vulnerable Countries, Sustain Our Future Prosperity” in Washington, DC.
Georgieva said the global economy was at another highly uncertain moment.
According to her, tentative signs of stabilisation earlier this year have receded, and the outlook is increasingly risky and uncertain.
“From our latest World Economic Outlook, we project global growth to slow down to 2.8 per cent in 2023 and remain weak, at around three per cent, over the next five years.
“Underlying inflation remains stubbornly high, geo-economic fragmentation affects trade and capital flows, and downside risks have increased”, she said.
The IMF boss said fighting inflation and safeguarding financial stability had become more complex with the recent banking sector pressures.
She said that low-income countries were particularly vulnerable given high debts, and with their per capita income growth lag, it was becoming harder for them to catch up.
“In this environment, our Global Policy Agenda concentrates on the path to restoring both short and medium-term prospects for sustainable and inclusive growth.
“Strong policy action is needed together with pragmatic approaches to find areas of common ground to respond to shared challenges. Let me highlight three priority areas, ” she said.
Georgieva said the first priority was to safeguard economic and financial stability as a basis for stronger growth through resolute domestic policies to reduce inflation and debt while bolstering global trade.
She said that if financial pressures should remain limited, the fund would expect Central Banks to sustain the fight against inflation.
Georgieva reiterated that countries should make further efforts to reduce budget deficits which was critical to supporting the fight against inflation and debt reduction.
She said that such actions must be coupled with targeted support for the most vulnerable.
She said the second priority was to support vulnerable countries through stepped-up international financial assistance and debt relief.
“The IMF has provided nearly 300 billion dollars in new financing for 96 countries, to more than half our members since the start of the pandemic.
“Just in the six months since our Annual Meetings our Board has approved 23 new arrangements. ” she said.
She said the fund had stepped up support for vulnerable middle-income countries, including through a temporary increase in the amount members could borrow from the IMF.
“Yet, for the most vulnerable members of our global family, additional support from the international community is essential.
“I am making a double plea on their behalf: help them resolve crushing debt burdens, and help ensure that the IMF can continue to support them going forward.
“We have also used our new tools to meet new challenges. Our Food Shock Window is helping countries cope with the economic consequences of Russia’s war in Ukraine, ” she said.
She said the Resilience and Sustainability Trust (RST) focused on long-term challenges such as climate change.
She said that five countries were already benefitting from RST support, with many more standing on the beneficiary line.
According to her, the third priority is to sustain our future prosperity by jointly tackling climate change and investing in a more inclusive and digital future.
She urged members of the fund to think of steps to accelerate the digital revolution, improve the business environment, and boost human capital and inclusion.
“The IMF is proactively engaging with our members to chart a clear course to a stronger and more sustainable path for the global economy.
“We call on all members to work this year to successfully complete the review of quotas, the building blocks of the IMF’s financial structure so that we can continue to strongly fulfil our mission.
“We have overcome enormous challenges before, especially over the past few years, and I am confident that together, we can do so again, ” she said.
