I would like to thank Secretary-General Guterres and H.E. K P Sharma Oli, Prime Minister of Nepal, for spearheading this important discussion on strengthening our multilateral system for a better tomorrow. The timing could not be more important – the choices we make this decade will be critical for determining our future.
By Kristalina Georgieva
When we look into the future, it is important to first recognize where we are today. Let me start with the current state of the global economy. On the positive side, the world economy has proven to be remarkably resilient to the multiple shocks of the last years. Inflation generated by these shocks, and the response to them, is finally receding. Major economies are poised to avoid the recession that many feared would take hold.
But we also see that prospects for growth are at their weakest in decades, which means fewer jobs and lower incomes. We expect global growth of around 3 percent each year over the next five years. This is almost a percentage point lower than in the decades before the pandemic.
Worryingly, these trends are most dramatic for low-income countries. These countries’ output is still 7.5 percent below the pre-pandemic growth trajectory. Add to this elevated debt pressures, and we see risks of a low growth-high debt trap.
The political economy environment is also becoming even more complex. In many countries, feelings of unfairness are eroding trust and stoking social unrest. Globally, fragmentation is rising.
And yet, we stand at the cusp of a remarkable transformation fueled by green innovation and technological change. We can harness green growth and create green jobs if policymakers are laser-focused on reshaping their economies. Technology can provide a much-needed boost to productivity if deployed properly.
For instance, IMF analysis suggests that artificial intelligence has the potential to add up to 0.8 percentage point to global growth.
This global backdrop translates into three essential policy recommendations for our member countries: (i) continue to do what works well – implement strong policies and build strong institutions; (ii) remove the obstacles to growth both domestically and internationally; and (iii) resist excessive protectionism, so we can build a stronger global economy together.
The IMF is doing its part, driven by four priorities. First, we will continue to work with our members to help them design sound macroeconomic policies.
Second, we will leverage our financial strength to direct more resources to low-income countries. We provided financing of US$370 billion to our members over the past few years, and we are generating more funding for low-income countries through the Poverty Reduction and Growth Trust and the Resilience and Sustainability Trust.
Third, we will continue to help countries address debt issues and speed up debt restructuring, including through the Common Framework. We established, jointly with the World Bank, the Global Sovereign Debt Roundtable and we modified our debt policies to ensure that we can provide financing to countries more quickly.
Finally, we will continue to work to become more representative. Our membership agreed to create a third chair for Sub-Saharan Africa on our executive board to improve the region’s voice and representation. We are also working with our membership towards a new quota formula.
My message today is simple: together we are stronger. Let us work together to lift our ambition now, in this decade, to build a better future for all.
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