IMF Chief Kristalina Georgieva asks G20 Leaders to Strengthen Global Financial Safety net

New Delhi, 19th July 2023: Kristalina Georgieva, the head of the International Monetary Fund (IMF), has urged G20 leaders to take quick action to strengthen the global financial safety net. She stressed the need of addressing the world economy’s difficulties during the third meeting of G20 finance ministers and central bank governors on Tuesday (July 18) in Gandhinagar, India.

Georgieva praised India as a great example in the world economy, but she also expressed some reservations. While the global economy is still growing, it is not as powerful as it once was, according to her. She voiced concern about the disparities in economic conditions between countries, with some doing well while others struggle.

She said, “Divergences in economic fortunes across countries are a persistent concern: some pockets of the global economy are doing well; others are weakening but still growing; and vulnerable countries are falling further behind.”

She further added, “On inflation, there is some encouraging news – the trend is finally downwards. But headline inflation is still too high and core inflation remains sticky despite the significant monetary policy tightening.”

The IMF head also drew attention to rising commodity costs, which disproportionately affect individuals with lower incomes.

She said, “Elevated food and fertiliser prices are particularly worrying, especially for low-income households for which food insecurity and malnutrition are now much more persistent.”

She emphasised the necessity of keeping inflation under control and strengthening the overall economic condition.

Georgieva said, “We are thus looking at a mixed picture, and risks remain on the downside. Inflation could remain higher for longer, requiring even more monetary policy tightening, and fragmentation could weigh even more on growth.”

Georgieva asked G20 leaders to act within their respective countries. She stressed the importance of actions aimed at lowering inflation and managing finances properly.

She also urged policymakers to enact policies that foster corporate growth and employment creation.

Georgieva also emphasised the importance of assisting economically weaker countries. While advanced and strong emerging market economies have large foreign reserves totaling more than $10 trillion, Georgieva stressed that many other countries rely on pooled resources from international agencies such as the IMF.

The IMF currently has about $1 trillion in lending capacity, but quota resources, which are critical to ensuring the predictability of the IMF’s ability to assist countries, have declined in relative terms. Georgieva urged the G20 to move to reestablish the primacy of IMF quota resources by completing the 16th quota review by the end of the year.

The IMF’s president also addressed the critical problem of national debts. Some countries have borrowed large sums of money, making it difficult for them to repay their debts.

Georgieva urged the G20 to collaborate in order to create solutions that allow for smoother and speedier debt restructuring processes, allowing countries to recover and move forward.