IMF Managing Director Urges Global Cooperation for Global Challenges

Ms. Kristalina Georgieva, Managing Director of the International Monetary Fund (IMF), issued the following statement today at the conclusion of the Group of 20 (G20) meeting of Finance Ministers and Central Bank Governors in Riyadh, Saudi Arabia:

“We met at a time of particular uncertainty. At the start of the year, global growth appeared to have bottomed out, with signs of stabilization and expectation of a modest rebound—from 2.9 percent last year to 3.3 percent this year. This tentative stabilization was helped by continued monetary and—in some countries—fiscal easing, as well as by the Phase 1 trade deal between the US and China. The projected recovery, however, is fragile and predicated on a return to more normal conditions in previously stressed or underperforming economies.

“Since that projection was made, the COVID-19 virus—a global health emergency—has disrupted economic activity in China and could put the recovery at risk. Above all, this is a human tragedy, but it also has negative economic impact. I reported to the G20 that even in the case of rapid containment of the virus, growth in China and the rest of the world would be impacted. Of course, we all hope for a V-shaped, rapid recovery—but given the uncertainty, it would be prudent to prepare for more adverse scenarios.

“And there are other risks: high debt levels in countries and corporates could be affected by a rise in risk premia or an unanticipated tightening in financial conditions; and climate change has been associated with an increase in the frequency of natural disasters.

“We have an important agenda ahead. With slow growth and low inflation, monetary policy should remain accommodative in most G20 economies. Fiscal policy should also be deployed—where space allows—to support economic prospects; this does not have to be costly and could be done through reprioritizing spending toward high-return infrastructure and investment in people. At the same time, structural reforms should be implemented to boost productivity, growth, and jobs.

“Beyond country-level policies, many challenges are global and require global solutions. We discussed a number of these in Riyadh, including addressing tax challenges that arise from the digitalization of the economy; strengthening debt transparency and sustainability; and building a more open and resilient financial system. There was also strong support for the Saudi Presidency’s agenda of enhancing access to opportunities, especially for women and youth.

“I would highlight three other areas where international cooperation is key:

—First, we must work together to contain COVID-19—both its human and economic impact—especially if the outbreak turns out to be more persistent and widespread. The IMF stands ready to help, including through our Catastrophe and Containment Relief Trust that can provide grants for debt relief to the poorest, most vulnerable countries.

—Second, cooperation is required to further reduce uncertainty over global trade. Despite the Phase 1 deal, trade tensions have shaved 0.6 percent off this year’s global GDP. It remains essential to move from trade truce to trade peace.

—Third, the world must collaborate to scale up climate change mitigation and adaptation.

“COVID-19 is a stark reminder of our interconnections and the need to work together. In this regard, the G20 is an important forum to help put the global economy on a more sound footing.

“In conclusion, I would like to thank Minister Mohammed Al Jadaan and Governor Ahmed Abdulkarim Alkholifey for the excellent organization of our meeting and their warm hospitality.”