TUE. 11 APRIL 2023-theGBJournal | A robust recovery of the global economy remains elusive as a rapid transition to higher interest rates exposes financial vulnerabilities, the IMF’s managing director, Kristalina Georgieva said on Monday.
Speaking to World Bank President David Malpass on the first day of the Spring Meetings, Kristalina Georgieva said that the global economy’s slow pace of projected growth over the next five years posed particular challenges for the world’s poorest countries.
While emerging-market economies are expected to see relatively strong growth, the outlook for developing economies is weaker. This “dangerous divergence” in growth prospects means that average per-capita incomes in low-income countries will not grow fast enough to converge with those of middle-income countries.
Malpass said that capital was flowing away from developing economies and that small businesses in these countries could not access the investment they need to expand.
This, along with high food and fertilizer prices, was fueling income divergence and adding to global inequality and fragility, he said. “It’s gravely concerning.”
Meanwhile, Georgieva in her opening remarks delivered at the IFF/BWC/Paulson Institute Panel on “Scaling Up Resilience and Sustainability Financing” Monday, spoke to the creation of the Resilience and Sustainability Trust, noting that the first five Resilience and Sustainability Facility (RSF) programs are in place already, 6 months at par with the urgency.
‘’Demand is strong, with some 44 countries interested to join the programs already in place. Equally strong is the collaboration with our partners, and I want to thank them all, especially our sister institution, the World Bank,’’ she said.
‘’But we also have much more to do. Why? Because climate change affecting lives and livelihoods everywhere is one of the most critical macroeconomic challenges that IMF members are facing.’’
According her, addressing this challenge requires a comprehensive and collaborative approach based on three interrelated elements: adequate policies, investment & innovation, and financing.
‘’Let me give you an example. Putting the world on the net-zero emission trajectory and adapting to the part of the global warming already locked in requires trillions of dollars of investment. Governments cannot mobilize it alone, and the financing gap is particularly large, especially not in emerging and developing countries. We must find ways to substantially scale up private finance.
To do so, countries must adopt transformative climate policies and implement regulatory and institutional reforms to help create a conducive environment for private climate finance.
At the same time, we should harness public and private financing and explore options to finance countries’ climate action. Here, everyone—multilateral institutions, national authorities, and the private sector—has a role to play within our comparative strengths. Key is to collaborate closely in these efforts and turn climate challenges into opportunities.’’
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