Managing Director's Remarks
September 8, 2021
Introduction
Thank you very much, Dr. Evans. I am so deeply touched.
It is an incredible day for me and my family. My daughter, who is also a graduate of AUBG, is here --with a possible future graduate of AUBG, my granddaughter, and another graduate who is my granddaughter’s godmother.
I want to recognize Ambassador Herro Mustafa. We would not have had this wonderful university without the dedication and generosity of the American people. I want to thank Mayor Stoyanov for being here. I want to recognize the presence of Regional Governor Shushkov and the chairman of the municipal council Taskov. Thank you for joining us.
It is particularly meaningful for me that this takes place during the celebration of the 30th anniversary of this university. Because, just as the university started on its journey in 1991, I started on my journey to where I am today, at the helm of the IMF, with a Fulbright scholarship to go to MIT, that very same year.
It is so touching to have dear friends, Encho Gospodinov, Bob Zoellick, Ngozi Okonjo-Iweala, taking the time to provide testimonials to you for your decision. I must admit, I feel some humility in listening to all that. And just to lighten up the atmosphere, I would remind us of a famous quote: “I’m not dead yet!”
So, what do I want to share with you today? I thought I would talk to you about the incredible experience of these very challenging two years since I have been at the helm of the IMF, and what lessons I have learned for the future.
Learning From A Crisis Like No Other
We have been living and are still living through a crisis like no other. In 2020, the world economy was on the brink of collapse, and we lived through the worst recession since the Great Depression.
In 2021, we are projecting a recovery, but it is a recovery also like no other – stopping and starting, and with new issues emerging on the horizon.
What have we learned from this crisis so far?
We learned about our interdependence and our dependence on nature.
We learned about our incredible ingenuity, with researchers coming up with vaccines in record time.
And we learned about our ability to do things that are unthinkable when we are pressed to move.
More specifically, we have taken the world economy to a safe harbor by providing exceptionally high fiscal and monetary policy support.
And for us Europeans, we went to borrow on markets as a collective, something I thought I would not live to see.
We also recognized that economic policy cannot be left only to economists. And for the first time at the IMF, we are integrating epidemiological projections for how the vaccine is going to protect us and how variants are going to hit us, so we can decide on what is the likely pathway for the world economy.
And just to give you the story for this year, we still expect growth for the world economy of around 6%. But the combination of this 6% continues to shift, with some countries doing better than others.
We also learned quite a lot about the fractures in our world.
The most obvious one: our complete lack of preparedness for a pandemic that scientists have told us time and again, is going to come.
Second, we learned that when it comes, our collective ability to act is hard to muster.
We also learned that in hard times, some are better protected than others. We saw advanced economies, rich countries, being able to pour 28% of GDP equivalent in fiscal and monetary support to cushion the impact of the crisis on their businesses and their people.
What have emerging markets done? 6%.
What are poor countries doing? 2% of a much smaller GDP.
What is the result? A dangerous divergence growing within countries between people that are doing better than others, such as those who have access to the digital economy. And very importantly, divergence across countries. Why should that matter to all of us? Because if we continue on this pathway, it will translate into more insecurity and instability in the world we live in.
At the IMF, I take pride that my institution stepped forward decisively. We have provided financial lifelines to 86 countries. I got calls in April of last year from presidents and prime ministers telling me, Kristalina, thank goodness for the Fund, because if you're not there we cannot pay our nurses and doctors and we cannot sustain our businesses.
Ngozi mentioned the Special Drawing Rights. It is remarkable that we managed, collectively, to give a boost to the world economy of $650 billion. This is the largest allocation of Special Drawing Rights in the history of the Fund. After the global financial crisis, it was $250 billion, and people thought it was gigantic!
This is really a miracle instrument: we draw from the strength of the collective. We have 190 members: some of them are very strong, and some are weak. The strength of these members together, allows us to provide forever, a credit line to the weaker countries, so they can weather the crisis we face.
And for those who may be interested: how much did Bulgaria get from it? $1.3 billion, 2% of GDP equivalent.
Lessons For The Future: Building A Resilient World
Now, what are the lessons we should take for the future, and that is the most important part of my message to you today? The message I have is: we have to recognize we live in a fast-moving, shock-prone world. And we ought to build agility, adaptability, and resilience in this world of ours.
It was my granddaughter who taught me a very important lesson about the speed of change, how we are no longer in the world in which I grew up, of slow developments.
I was telling her, as a good grandmother, how when I was her age there was no TV, and there were no computers. And she looks up at me -- she was five at the time -- and says, “so you only had iPads?”
My point is that we have to recognize that preparedness, prevention, early action, resilience, are ingredients we have to adopt as people, as communities, as countries, as businesses.
What does it mean to build resilience?
One, resilient people: people that are very well educated, such as those of you who will be graduating from here, that are healthy and socially active, but also with strong core values of humility, empathy, kindness, because we need each other in this world of ours. We need to be able to offer a helping hand.
Human capital is what makes a difference for this future. 70% of the wealth of this planet is us -- it is people. And yet, so often we pay more attention to the roads and the bridges and buildings, and not to what makes us strong -- us.
Second, resilient planet.
One of the things I learned in my life is that we often ignore the law of unintended consequences. In the case of climate change, so very obvious. For centuries, we built prosperity using oil and gas, and coal, and it really was important, and it worked. We got electricity, transportation, we connected our industries.
But we also had CO2 emissions that are putting our future in peril. We have to deal with it, decisively, and I hope that young people here would be leading us in that regard.
And last: resilient economies. Bulgaria is a good example of macroeconomic stability, but not the best example of inclusiveness of development. Far too many of our people feel left out and left behind, and that is a global problem. So if we want to be resilient, we ought to deal with this exclusiveness of wealth that we have seen accumulating over time.
And obviously we have a huge responsibility to work together as one humanity, which is the duty of my organization. The duty of all of us.
I'm very pleased that there are students from 45 countries here. You together make a difference. And I want to leave you with a simple task. Abraham Lincoln said, “the most reliable way to predict the future is to create it.”
So, to you young people and future leaders: do take on that responsibility. Do create a future that we can all respect and enjoy. Thank you very much!