The Managing Director of the International Monetary Fund joined the Heads of Agency Aid for Trade focus session today (Wednesday, July 27, 2022) to examine how the multiple crises facing the world are impinging on trade and development prospects of developing economies.
The session was organized by the World Trade Organization and the panel consisted of Kristalina Georgieva, Managing Director of the International Monetary Fund, Ngozi Okonjo-Iweala, Director- General of the World Trade Organization, Odile Renaud-Basso, President of the European Bank for Reconstruction and Development, Woochong Um, Managing Director General of the Asian Development Bank, and Mari Elka Pangestu, Managing Director of Development Policy and Partnerships at the World Bank.
“Where inflation is high, the authorities have an obligation to throw cold water on it to bring inflation down. Why? Because otherwise incomes will suffer, the foundation for growth will suffer, and the prospects for returning to growth will diminish. Returning to the growth we need for the world economy. But we are in a very difficult place, very different from 2020 when there was much more space to take action. It is pretty much gone in many countries and monetary policy and fiscal policy look to the same direction. They work hand in hand. Monetary policy accommodating; fiscal policy accommodating,” said Georgieva.
Georgieva highlighted debt-for-climate swaps as an emerging tool to support not individual projects, but the whole policy package governments adopt. She also urged advanced economies to help developing countries to step up their climate action.
“It doesn't matter what advanced economies will do if emerging markets and developing economies fall short in climate action because they are where growth is most impactful today. This is where we are going to see increased emissions and our message from the IMF has been–as it is the message from the World Bank and from Ngozi and Odile and from Woochong– please help developing countries to step up their climate action,” said Georgieva.
Georgieva concluded her remarks at the event with a warning of the consequences of fragmentation and the issues policy makers need to address to create a more connected and resilient world.
“My view is that we should make every effort recognizing geopolitical reality, to identify the issues where there is simply no way for the world to lead to achieve a positive outcome in a fragmented status. And I can say that there are four issues that are clear. Obviously, trade is where connectivity has served us so well. Climate change, we talked about it. How on earth we are going to be successful if we don't find ways to collaborate? The question of new emerging trends. The pandemic clearly is one but cyber security and the ability to protect the cyberspace space is another one. And last but not least, the world is now learning that it is a more shock prone status and future and for a more shock prone world where we don't even know what may be a threat to come, how can we miss on working together?” said Georgieva.
To watch the full event, click here.