Transcript

Transcript of International Monetary Fund Managing Director Kristalina Georgieva's Opening Press Conference, 2020 Spring Meetings

April 15, 2020

Kristalina Georgieva, Managing Director, IMF

Gerry Rice, Director, Communications Department, IMF

MR. RICE: Good morning, everyone. And welcome to this press briefing on behalf of the International Monetary Fund. I'm Gerry Rice of the Communication Department. And a warm welcome to everyone to our Spring Meetings this year. Let me begin by wishing everyone well. I hope everyone is staying safe and taking care.

We have with us this morning the Managing Director of the IMF, Kristalina Georgieva. She is here to take your questions. We are doing this virtually, of course. So, thank you for sending your questions in advance. We have quite a number, and I see some questions also popping up online. We'll take them in real time.

We are on the record. We are going to do this very crisply this morning. And with that, I'm going to ask the Managing Director to make some opening remarks. And then we'll come to your questions. Managing Director?

MS. GEORGIEVA: Thank you. I send my very best wishes to everyone for health and strength, and a big shout out for the health workers out there to protect us against COVID-19.

It is the words of T.S. Eliot, "April is the cruelest month," I want to start from. Yes, nature is reawakening, but streets and schools, and shops, and offices are empty. And the pandemic continues its deadly march around the world.

As I said during my curtain raiser speech, it is a crisis like no other. In scope, we are now in the worst recession since the Great Depression, we are experiencing a 3 percent contraction of global GDP, and 170 countries are going to see income per capita falling versus what we expected three months ago for 160—for them to go up.

It is also very unusual as a combination of a health crisis and an economic crisis that is simultaneously a supply and a demand shock, and while we are accustomed in crisis to live with uncertainty, this time is the novel coronavirus new unknown we're wrestling with.

For the first time in the history of the IMF epidemiologists are providing inputs for our macroeconomic projections, and they're telling us it may get even worse if the virus continues its round for longer, or if vaccines and treatment are slow to come around.

Exceptional times require exceptional action, and that is exactly what is in our Global Policy Agenda this April. We are outlining three priorities: first, protect lives and that means fund health systems, and refrain from restrictions of export of medical supplies so everybody can have access to them, including poor countries.

Second, protect livelihoods. Make sure that the lifelines for households and businesses are there during these months of our economies standing still. Cash transfers, credit supports, changing conditions of servicing credits, they all matter, making sure that our financial system continues to function, it matters. And what we have seen is central banks providing ample liquidity, $8 trillion of fiscal measures.

So, our message is, spend as much as you can, but keep the receipts. We don't want accountability and transparency to take a back seat in this crisis.

Third, prepare for recovery. Work with the health professionals on planning how a reopening can best take place. And also, be ready for fiscal stimulus when it is time, when actually demand can be lifted and help the economy to come back.

Last, but not least, think of the challenges we are going to face on the other side of this crisis: elevated debt levels, bankruptcies, unemployment, rising inequality, and make sure that we put measures in place now to protect us against those challenges. Care for the most vulnerable, the most vulnerable people, and the most vulnerable countries.

And that takes me straight to the role of the IMF, what we are proposing to our governing body in the Global Policy Agenda. First, deploy the full US$1 trillion lending capacity to support countries dealing with the tremendous challenge this crisis presents.

Second, double emergency financial assistance. We started aiming for US$50 billion, we are now at US$100 billion, and in one short month, the month of April, our Board will have approved half of what is now exceptionally high demand for these resources, 102 countries asking for it. Already we disbursed for 15 in a record short time.

Three, make sure that we can do more for those that need us the most. And that means aiming to triple concessional financing which is so necessary for our poor members.

Four, ease the burden on the poorest through debt relief, and I am so grateful to our shareholders for already approving debt relief for 25 of our poorest members. We will need to raise resources, and I'm so glad that during the G20 discussion this morning there was unanimous support for the Fund to do more, especially for those who need us more.

I want to finish with gratitude to the G20 for exceptionally rapid decision on debt relief for the poorest countries. It would release billions of dollars for them, and that is exactly what we need, solidarity, so we can come through this together.

And I want to finish with a more positive quote. This time from Abraham Lincoln, "This shall also pass." How well come on the other side depends on how well and how firmly we work together. We will do our part. Thank you.

MR. RICE: Thank you very much, Kristalina. Look, we are under constrained circumstances, so I'm not going to take every single question that's been posted here. I will try to group them a little bit just, again, for the sake of the time constraint and the technology constraint. Thank you for bearing with us today.

But I want to start with the many questions on how the IMF, the Managing Director, sees the global outlook. I'm seeing -- I want to focus it around Heather Scott of AFP, her question: How concerned are you that governments, especially in countries already facing fragile economies could face massive protest, become destabilized amid the great lockdown? And in that vein, how much more fiscal spending do you think still needs to be required to ensure the global economy can restart once the pandemic has passed?

MS. GEORGIEVA: It is really crucial for governments, and also for international organizations, to lean forward with all we have. So we can, collectively, protect the world economy.

Some countries can do more, and we urge them to do it. And some countries need more help, and that is where the IMF, and the multi-lateral development banks are so critical, in this moment.

I want to give credit to David Malpass, the President of the World Bank. And, to all heads of multi-lateral development institutions, they are also mobilizing up to US$200 billon, so they can support the countries, that you have rightly said, have less fiscal space, to be able to take the necessary actions.

MR. RICE: Okay, the second –- I’m sorry --

MS. GEORGIEVA: And, just to add, US$8 trillion. This is remarkable, in a very short period of time, has been deployed. And, there would be need for more. That is for sure. How much more would depend on how effective measures are, and how quickly the virus retreats.

MR. RICE: Okay. Thank you. The second clutch of questions is really around the IMF. What are you doing, the IMF’s resources? So, got a couple of questions, that I’m going to focus them around Larry Elliot, of The Guardian, asking: Are the IMF’s own resources adequate to meet the demands for help, he says, for more than 80 countries? And secondly, what steps are being taken to ensure that the private creditors are part of any debt relief package? And, it’s essentially the same question from Tony Rowley, our friend from the South China Morning Post. Saying the IMF has a trillion of resources available to help with the crisis. If this proves insufficient, what additional funding routes are available to the Fund? Is there a possibility, feasibility, of an emergency IMF quota increase? And, so on. So, again, a clutch of questions around IMF resources, Kristalina.

MS. GEORGIEVA: It goes to the wisdom of our shareholders, that after the global, financial crisis, they have decided to quadruple the financial capacity of the IMF. From $250 billion then, to 1 trillion now. And, we take it to heart to act decisively with what we have now, to provide lifelines to emerging economies, in developing countries. And, we are doing it.

It is also very clear, that there are countries that need more support. And for those, we are determined to raise more concessional resources. We have full support from the membership, to go on the offensive, to raise more capacity for concessional funding from the IMF. Our target is to triple what we do for these countries.

We are also very keen to explore other avenues, that would allow us now, in the urgency of the situation, to do more. There is an emerging consensus that existing SDRs could be deployed to help in developing countries. And we will assess, as the crisis evolves, where we are. The membership is very engaged, and very supportive.

So, right now, to sum it up, use what we have now, to the fullest. Make sure that we enhance our instruments, our toolkit, to be effective. And, keep our hand on the pulse of this crisis, together with the membership, bringing consensus, to a level that is necessary, to move.

MR. RICE: Thank you. Many picking up on what you’ve just said, Kristalina, about IMF resources: James Politi of the Financial Times, amongst others, is just asking me, right now: A series of European and African leaders have called for the deployment of additional SDRs, to help emerging markets with liquidity. But the U.S. is opposing this, says James. How problematic is this for the global response? And, are there any credible alternatives?

MS. GEORGIEVA: What we are concentrating on, is to act decisively with what we have, and where there is full consensus among members. We recognize that there are other options to be explored, and we will continue to do so.

And as it was, in the case of the global, financial crisis, the world, under the pressure of necessity, always comes together. I can say, that just seeing how the G20, united around that standstill, for the poorest members, gives me that confidence, that whatever is necessary, we will collectively do, in the face of this tremendous crisis.

MR. RICE: Thank you. Another question just coming in from Japan. Asahi Shimbun asking: Japan itself is under an emergency declaration, and is entering a severe recession with limited fiscal space. With that in mind, what role do you hope for Japan to play, at this critical juncture, including in helping other countries deal with the pandemic?

MS. GEORGIEVA: Let me first recognize the tremendous generosity of Japan, indeed faced with the pressures of the crisis at home. Unprecedented package of measures to protect households, and businesses in Japan. And, despite these pressures, Japan was one of the first countries to come with a generous $100 million support for the debt relief we provide to 25 eligible, poorest members of the IMF.

Japan is a very strong supporter of concessional financing resources, already engaged with us on that goal we have, to triple capacity for concessional finance. And, it reflects that recognition in Japan, and across membership, that we are in this together. We can’t win against this pandemic, until we win everywhere.

MR. RICE: Thank you. Many questions coming in, from all over the world, on various regions. I want to begin with Sub-Saharan Africa, and I will paraphrase the many questions coming in around how badly will the region, Sub-Saharan Africa, be affected by the pandemic, in the IMF’s view? And, what emphasis is the IMF giving in its work to Sub-Saharan Africa? Can you give us a sense of that, please?

MS. GEORGIEVA: Well, Sub-Saharan Africa had a number of countries stepping up, over the last years. And, it is so tragic to see that momentum being stopped. And, there are of course, even before Coronavirus, been experiencing very dramatic difficulties: conflicts, natural disasters. Sub-Saharan Africa ought to be the center of our attention, and it is.

We now have more than 30 countries applying for emergency financing. We are prioritizing rapidly responding to these requests, recognizing how critical this lifeline is for them. We are also very keen to see what more can be done. The debt relief that David Malpass and I called for, the debt standstill, it is benefitting a large number of countries, in Africa. As is our debt relief initiative, that the Board has approved.

But we need to think beyond that. We need to think about recovery. We need to think about making sure that the Continental Free Trade Agreement, doesn’t get derailed because of Coronavirus. And that means engaging with the leadership in Africa. And, making sure that we are putting, not only financial resources, but also, opening up trade channels, making sure that we support the industries, in Africa, that depend on trade, of the revival of trade.

And, I want to end by saying, this Friday we are going to have an extraordinary session. President Ramaphosa, the President of the African Union, would lead us together with David Malpass. We have invited the [United Nations] Secretary General, as well as leaders from the Continent, and the friends of the Continent, on mobilization with Africa. And I am sure we would come out of it with very concrete commitments to support the Continent, to support Sub-Saharan Africa, and actually, the broader African continent.

MR. RICE: I want to turn to the Middle East where, again, a number of questions coming in. I'm going to paraphrase them, again, around how you see the pandemic affecting the countries of the Middle East? And particularly in the context of the volatility around oil markets and oil prices, again for those Middle East countries.

MS. GEORGIEVA: What we have to recognize is that the Middle East faces severe shock. COVID-19 pandemic, the economic fallout from it, and on top of it, falling oil prices for many of the countries there that are all exporters. These shocks are compounded by a big reversal of portfolio flows through emerging markets.

In the case of the Middle East, what we are seeing is some, close to US$2 billion, leaving the Middle East since mid-February. What we expect is growth to fall, as it happens everywhere, and what we want to support Middle East with is emergency financing. We have a number of countries that have asked for support. We have provided already approval … for Tunisia. In our case, the Middle East and North African region also includes Afghanistan and Pakistan. So, I want to stress that these countries are also benefiting from emergency response.

We have been augmenting some of our instruments. Morocco has decided to draw on the Precautionary Liquidity Line with the Fund. And so, we are, of course, ready to support the countries there with the full complement of instruments we have at our disposal.

MR. RICE: Thank you very much. Turning to Asia and again, clutching the questions around how you see the challenges, the prospectives for Asia, Managing Director, in the context of the pandemic? And, particularly, how do you see the prospects for China's recovery within that Asian context?

MS. GEORGIEVA: Well, China was first hit and then a number of countries were on the receiving end of COVID-19 relatively early. What we expect for Asia Pacific is for average growth to be flat, zero in 2020. This is actually a worse performance than during the global financial crisis and during the Asia crisis, the 1998 crisis.

It is exposed earlier and that means that it will recover earlier. What we hope to see is not only effective use of all the instruments of monetary policy and fiscal policy measure, but us learning from Asia on containment strategies, how they are being implemented. So, the rest of the world will benefit from the experience Asia is accumulating.

With regard to China, we are seeing, of course, a very dramatic drop in the first quarter. China being the first country to experience the containment strategies against coronavirus. And now what we see in the second quarter is reopening of the economy. Our projections for China's growth are in the order of 1.2 percent for 2020 and a boost to 9.2 percent in 2021. Provided that in this uncertainty, the baseline scenario is the one on which the world functions.

MR. RICE: Thank you very much. So, turning to Latin America, Caribbean. How do you see the outlook? And I do want a question popping up for me on Argentina just in the Latin America context from Clarín, Paula Lugones, again, in the context of the pandemic and the crisis: How do you think that will impact the ongoing discussions with Argentina? And what kind of assistance can Argentina expect from the IMF?

MS. GEORGIEVA: Well, Latin America, even before COVID-19, was struggling to regain footing in terms of growth. Now, what we see is a deep economic recession across Latin America and the Caribbean in 2020, partial rebound in 2021. The growth in the region is expected to fall by 5.2 percent, in other words, growth minus 5.2 percent, rebounding to 3.4 percent.

And I want to differentiate in this context the Caribbean. All countries in the Caribbean are highly dependent on sectors that are tremendously, severely hit by this pandemic: tourism, transport. I was in a virtual meeting with governors from Latin America and the Caribbean and I can tell you my heart is bleeding for these countries where the drop in economic activities wipes out revenues, and at the same time, the boost necessary to just maintain the lives of people, the livelihoods of people is so dramatic. So, I can tell you that we are already supporting the Caribbean. There are already programs approved, and we would be looking very carefully in what more we can do.

We see measures taken everywhere, boost in Brazil, 10 percent boost in terms of measures to support the economy. Same leaning forward is happening everywhere. Let me just go to Argentina, since you asked about Argentina. Argentina has been very concentrated on addressing this crisis with the appropriate sequencing of measures of the health front, as well as support for the most vulnerable people in the most vulnerable segments of the economy.

The country is at a point of time where they're going to put in front of them creditors, say proposal for debt restructuring. It is really difficult time for everybody, but in particular, it is difficult for countries that already stepped into this crisis with complex challenges. The same way the virus hits people with existing preconditions that are more vulnerable, the hardest it hits economies with preexisting difficulties the hardest.

MR. RICE: Thank you so much. We have about two minutes left. And, again, apologies to everyone for clutching your questions this way, but I don't want to leave without touching on Europe. And the question is, simply: Are the actions being taken by the European governments, the European institutions, are they sufficient? Are they enough?

MS. GEORGIEVA: What we are seeing is a tremendous mobilization across the European Central Bank and European governments and European institutions in the face of this crisis. Europe is particularly hard hit.

Growth projections for next year are grim. And at the same time, Europe is also leaning forward with all they have to fight the crisis. It is a moment for European solidarity and that is what the citizens of Europe expect from their governments and their institutions.

MR. RICE: Thank you very much, Kristalina, and thanks to everyone.

MS. GEORGIEVA: Can I just add one more point? We are telling everybody: “Do all you can.” And I just want to assure you that we are following ourselves on our own advice.

Everything is on the table in terms of measures we can take. What we do is first do all we can with the resources we have. Second, make sure that there are no gaps in what we have to be of service to the membership. Everything is on the table.

MR. RICE: Thank you so much. And again, thanks for your patience, those of you online today. We really appreciate it.

And just to remind you, join us again tomorrow. There will be another press briefing here including the Managing Director and the Chair of the International Monetary and Financial Committee after its meeting tomorrow morning. So, join us for that tomorrow. Send us your questions in advance.

Until then, stay safe and well and we look forward to seeing you soon. Thank you.