The IMF’s Managing Director Kristalina Georgieva set out the Fund’s Global Policy Agenda during her press briefing Thursday morning. Georgieva’s overarching message was that fiscal policy and monetary policy must go hand in hand, as the world faces continued and increasing economic hardship.
The aftermath of the pandemic, Russia’s war on Ukraine, and climate change are the key contributing factors in the global rising cost of living and food crisis. The IMF warns that there is a one-in-four chance that global growth could drop to a historic low of 2% next year.
Kristalina Georgieva, IMF Managing Director stressed that fiscal policy and monetary policy must not work separately.
“The obvious conclusion is that policy measures need to be well targeted and they need to be temporary. Steer away from across the board fiscal support that is neither effective nor affordable. If we are to help, people and fight inflation, we must ensure that fiscal and monetary policy go hand in hand. You heard me saying that multiple times. I'm going to say it again because it is so important for this message to penetrate when monetary policy puts a foot on the brakes. Fiscal policy should not step on the accelerator because if it does, we are for a very dangerous rate,” said Georgieva.
In addressing the continuing effects of Russia’s war in Ukraine on fuel prices, Kristalina Georgieva, IMF Managing Director highlighted the need to control inflation.
“I am convinced that if we do not restore price stability, we will undermine prospects for growth. We would create more uncertainty for investors, and we would put consumers in a very difficult spot. You all know inflation is a tax. On the lower income parts of our society and therefore cannot be allowed to fester for longer,” said Georgieva.
On the situation in the United Kingdom, Kristalina Georgieva, IMF Managing Director said that the Fund’s recommendation to all countries is that if recalibration in policy and budgets is necessary, governments should look to do so.
“Fiscal policy should not undermine monetary policy because if it does it. Then the task of monetary policy becomes only harder, and it translates into the necessity for even further increase of rates and tightening financial conditions. So don't prolong the pain. Make sure that actions are coherent and consistent. And I do believe that it is correct to be led by evidence. So if the evidence is that there has to be a recalibration, it is right for governments to do so,” said Georgieva.
Kristalina Georgieva, IMF Managing Director appealed to Lebanon’s politicians to put aside political differences the Lebanese people first in order to strengthen the country’s economy.
“I would appeal to everybody who is in the high corridors of power in Lebanon to put your country, your people first. We have a staff level agreement. We cannot move. Why? Because the prior actions we have identified that are for the benefit of the Lebanese people are not yet met. There is still this paralysis and it can only be resolved by the political leaders in Lebanon, putting aside what divides them and getting to a point of serving the people of Lebanon who deserve no less,” said Georgieva.
Kristalina Georgieva, IMF Managing Director congratulated India on the country’s growing economy.
“India deserves to be called the bright spot on this otherwise dark horizon, because it has been a fast growing economy, even during these difficult times. But most importantly, this growth is underpinned by structural reforms. Among them, the remarkable success in digitalization in India, from digital I.D. to providing all services and support. On the basis of access, digital access. This has been indeed a huge factor for India's success, and the country is now stepping into taking the lead on G20. From that position of strength, which makes me strongly believe that we will see India leaving a mark on the world for years to come during it, during next year's presidency,” said Georgieva.