Director General of the International Monetary Fund (IMF) Kristalina Georgieva said on Friday that price stability is “a necessary requirement and a basic condition for achieving growth and providing protection for citizens, especially the vulnerable,” stressing that combating inflation “remains an utmost necessity.”
In her intervention at the plenary session of the 2023 annual meetings of the World Bank and the International Monetary Fund held in Marrakesh, Georgieva said that investing in “strong economic foundations in light of weak growth prospects in the medium term has become sound and necessary policies and reforms.”
Addressing governments, ministers and officials present, Georgieva added: “If we face completely different economic conditions, policymakers must build sound economic foundations through sound policies,” and stressed that the world will face “high interest rates for a longer period.”
The IMF head, in a clear message to policy-makers, considered that further tightening of financial conditions could harm “markets and non-banking institutions,” stressing that strong supervision represents “a necessary factor and prudent public financial policy has become more important than ever before.”
Georgieva explained that debt and deficits are much higher than pre-pandemic levels, and the time has come to restore fiscal space, which requires difficult measures by governments.
Georgieva also revealed exciting data about the indebtedness of middle-income countries, as she confirmed that more than half of these countries have reached a state of critical indebtedness, and a fifth of emerging economies face differences in interest rates similar to what we see in cases of default upon payment, highlighting that there are signs of the success of the framework. Participated in debt restructuring, albeit at a slow pace.
The Director General of the International Monetary Fund stated that recently the Round Table on Global Sovereign Debts included all relevant creditors and debtors, considering that there are “promising signs for the future.” This is in an attempt to send a message of reassurance to countries groaning under the weight of indebtedness.
Georgieva pointed out that the global financial safety net represents a lifeline for many countries in their time of need, in which the International Monetary Fund occupies a leading position, as the Fund’s role has remained “prominent as a guarantor of those who have no guarantor over the past three years.”
The same official stressed that since the beginning of the pandemic, the Fund has provided $1 trillion in liquidity and reserves, stressing that this was achieved by distributing “allocations from Special Drawing Rights equivalent to $650 billion, and loans worth $320 billion to 96 countries.”
She explained that the Fund first activated its program by alleviating debts for the poorest member states.