THE Managing Director, International Monetary Fund (IMF), Kristalina Georgieva, has revealed that 40 member countries are raising funds for the Poverty Reduction and Growth Trust (PRGT), which provides zero interest rate loans to low income countries.
Speaking during a press briefing on Thursday on the topic, ‘Global Policy Agenda,’ at the 2023 annual meetings of the World Bank Group/IMF, holding in Marrakech, Morocco, Georgieva said during these meetings, member countries aim to put solidarity in action by increasing capacity to support low income members.
“I am pleased to share that there are now 40 member countries helping us get closer to our fundraising targets for the Poverty Reduction and Growth Trust (PRGT), which provides zero interest rate loans to low income countries.
“I can tell you it warmed my heart yesterday when we met with contributors to see how much more expanded the family of PRGT contributors are; big countries, small countries, rich countries, poorer countries coming together for the benefit of the most vulnerable in our global family,” she stated.
She further disclosed that the IMF will secure the full amount of the $40 billion that have already been pledged by donors to its new Resilience and Sustainability Trust (RST), which offers financing to help vulnerable low and middle income countries cope with the existential threat of climate change, adding that there are some encouraging signs that it will exceed $40 billion.
The IMF MD also expressed condolences to war victims in Ukraine, Middle East saying it is heartbreaking to see innocent civilians dying.
According to her, successive shocks since 2020 have pushed global output down by $3.6 trillion as of this year. This loss, she added, is unevenly distributed.
In terms of economic impact, the IMF MD said the institution is very closely monitoring how the situation evolves, how it is affecting especially oil markets.
“It is too early to say. We have seen some ups and downs in oil prices. We have seen some reaction in markets. As I said, we will be closely monitoring this.
“Very clearly this is a new cloud on not the sunniest horizon for the world economy, a new cloud darkening this horizon that is not needed. Pray for peace,” she emphasised.
Georgieva regretted that far too many countries and communities are affected by natural disasters and worse, by wars, in Ukraine and now in the Middle East, that cause tragic loss of civilian lives and tremendous suffering.
“We mourn the victims. We pray for peace,” she said.
She therefore called for international cooperation and collective resilience in the world of more frequent and severe shocks.
“We are experiencing severe shocks that are now becoming the new normal for a world that is weakened by weak growth and economic fragmentation.
“As you have seen in our latest World Economic Outlook, we project global growth in positive territory but only at three percent this year and 2.9 percent next year.
“We expect growth to remain low over the medium term and we are faced with deepening divergence in economic fortunes,” she stated.
She regretted that while the U.S. has already recovered to pre pandemic levels, most of the rest of the world did not and low income economies have been hardest hit because they have had extremely limited buffers to begin with, so it was hardest for them to protect their economy and their people.
In terms of policy recommendations, she said there is a need for countries to boost medium term growth.
“Today we simply do not have the growth that we need to heal from the impact of the shocks and provide opportunities to people so they can see the standards of living going up.
“Bringing modern infrastructure enables countries to foster digital, green growth. Strengthening governance creates room for businesses to flourish and investing in people prepares them for the job opportunities for tomorrow.
“Our research shows that smartly packaged reforms can have a big, short term impact, lifting output as much as eight percent over four years in quite a number of countries,” she said
The IMF chief further said she is hopeful that in the meetings, taking place in Africa for the first time in 50 years, members will agree to a third African chair at its Executive Board, from two to three, more voice to Africa.
She said, “In a more shock prone world, we need each other even more. Do not fall for the temptation to point fingers, oh, it is somebody else’s fault.
“Go with holding hands. When we are here, this is what we want to do, bring the membership together despite all the tensions, despite all the complexities,” Georgieva stated.
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