G20 Leaders Urged to Strengthen Global Financial System: IMF

International Monetary Fund Managing Director Kristalina Georgieva made the following statement today at the first meeting of the G20 Finance Ministers and Central Bank Governors in Bengaluru, India:

I would like to thank the Government of India for the generous hospitality and Minister of Finance Nirmala Sitharaman and Governor Shaktikanta Das for their inspirational leadership of the G20 meetings as we navigate together another challenging year.

India is a relative bright spot and an important engine of growth for the world economy, representing about 15 percent of global growth in 2023. India’s remarkable progress on Digital Public Infrastructure provides a strong basis to secure robust and inclusive growth over the medium term.

With global growth set to slow in 2023 and remain below its historical average, too many people in too many countries are struggling to make ends meet—a point that I highlighted in my recent blog on policy priorities forthe G20. The international community, therefore, has a responsibility to come together to find solutions for the most vulnerable members of our global family. This calls for urgent action to strengthen the international financial architecture, especially in the area of debt resolution and strengthening the global financial safety net.

Debt resolution

In light of rising debt vulnerabilities in many countries, I strongly endorse efforts to strengthen the debt architecture and improve the speed and effectiveness of debt resolution.

Sovereign debt vulnerabilities, already elevated before the pandemic, have been exacerbated by the shocks stemming from Covid-19 and Russia’s war against Ukraine. This is particularly the case for developing and low-income countries with very limited policy space and huge development needs.

It is therefore imperative for the G20 to strengthen the debt architecture. The G20 did so in 2020 with the Debt Service Suspension Initiative (DSSI) and by establishing the Common Framework (CF) for debt resolution.

Since then, the CF delivered a debt operation for Chad. It is now critical to complete Zambia’s debt restructuring, establish a Creditor Committee for Ghana, and advance work with Ethiopia.

Nonetheless, more predictable, timely, and orderly processes are needed both for countries under the CF and for those not covered by it, including Sri Lanka and Suriname.

This means that we must enhance dialogue and collaboration on debt issues. This is the goal of the new Global Sovereign Debt Roundtable (GSDR): to bring together creditors—official, old and new, and private—and debtor countries to discuss key issues that can facilitate the debt resolution process. We launched the GSDR under the auspices of India’s G20 presidency last week at the deputies’ level, followed by an engaged and constructive principals meeting earlier today. We will further build on this discussion during the World Bank-IMF Spring Meetings in April.

Strengthening the Global Financial Safety Net

In our role at the center of the Global Financial Safety Net, the IMF has been scaling up lending as our members confront the significant economic challenges that the past few years have brought.

  • Through our standard lending facilities and emergency financing, the IMF has approved $272 billion of financing to 94 countries since the beginning of the pandemic, of which 57 are low-income countries.
  • We have also stepped up our efforts to help tackle the global food crisis. Several countries have benefited from the IMF’s new Food Shock Window, including Malawi, Guinea, and Haiti, and more are expected to do so.
  • The new RST is providing long-term affordable finance to help members implement strong climate policies and catalyze additional financing. So far, four RST-supported programs have been approved by the IMFs Executive Board: Costa Rica, Barbados, Rwanda, and Bangladesh. With many more RST requests expected, we call on our members for further pledges to channel SDRs to the trust.

In a world of great uncertainty and repeated turbulence, it is critical to further bolster the IMF’s capacity to support its members. This applies most urgently to our concessional financing for low-income countries through our Poverty Reduction and Growth Facility (PRGT). Demand for PRGT support has reached unprecedented levels and can only be met if matched by an increase in PRGT loan and subsidy resources. In addition, a successful quota review—which the IMF’s membership has committed to complete by December 2023—is critical for a strong Global Financial Safety Net. The latter has always been important for global stability and is even more important in today’s challenging global environment, especially for the most vulnerable countries and people. Our common interest is to secure a well-functioning and integrated global economy, for the sake of a more secure and prosperous world.

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