Head of the International Monetary Fund (IMF) Kristalina Georgieva has called on G20 leaders to take decisive steps to make the global financial safety net stronger. Speaking at the third meeting of the G20 finance ministers and central bank governors in Gandhinagar, India, on Tuesday (July 18), she emphasised the need to address the challenges facing the world economy.
Georgieva commended India as a positive example in the global economy, but she also highlighted some concerns. While the global economy is still growing, it's not as strong as it used to be, she said. She expressed her worries about the unequal economic conditions in different countries, with some doing well while others struggle.
"Divergences in economic fortunes across countries are a persistent concern: some pockets of the global economy are doing well; others are weakening but still growing; and vulnerable countries are falling further behind."
"On inflation, there is some encouraging news – the trend is finally downwards. But headline inflation is still too high and core inflation remains sticky despite the significant monetary policy tightening," she informed.
The IMF chief also drew attention to the rising prices of goods, which hit people with lower incomes the most.
"Elevated food and fertiliser prices are particularly worrying, especially for low-income households for which food insecurity and malnutrition are now much more persistent."
She stressed the importance of controlling inflation and improving the overall economic situation. "We are thus looking at a mixed picture, and risks remain on the downside. Inflation could remain higher for longer, requiring even more monetary policy tightening, and fragmentation could weigh even more on growth."
Georgieva urged G20 leaders to take action within their own countries. She emphasised the need for measures that focus on reducing inflation and managing finances responsibly.
"To mitigate these risks, I call upon G20 leaders to seize the opportunity to move the global economy onto a more vibrant medium-term path. This requires both domestic and international policy action."
She also encouraged leaders to implement reforms that promote business growth and job creation.
Furthermore, Georgieva underscored the significance of supporting economically-weaker countries. Georgieva emphasised that while advanced and strong emerging market economies have sizeable international reserves totalling over $10 trillion, many other countries rely on pooled resources from international institutions like the IMF.
Currently, the IMF has nearly $1 trillion in lending capacity, but quota resources, which are crucial to ensure the predictability of the IMF's ability to help countries, have diminished in relative terms. Georgieva called on the G20 countries to take action and restore the primacy of IMF quota resources by completing the 16th quota review by the end of the year.
The IMF chief also discussed the pressing issue of national debts. Some countries have borrowed substantial amounts of money, making it challenging for them to repay these debts.
Georgieva called on the G20 to work together to find solutions that facilitate smoother and faster debt restructuring processes, enabling countries to recover and move forward.
