International cooperation and strengthening trust form the only path to preventing a “new fracture” in the world economy, the Managing Director of the International Monetary Fund (IMF), Kristalina Georgieva, underlined Thursday in Washington. .
Deploring a world “fragmented and marked by mistrust, where national security has become the main concern of many countries”, Ms. Georgieva, who was speaking ahead of the Annual Meetings of the IMF and the World Bank Group, called on member states to working together “in these troubled times”.
“We must not let this reality become an excuse for doing nothing to prevent a further fracturing of the global economy,” said the head of the IMF, launching a call to “work together, in an informed manner, to improve our prospects collective”.
The tensions shaking several parts of the world are not inevitable, argued Ms Georgieva, stressing the imperative to “lower the geopolitical temperature and tackle tasks that can only be accomplished together”.
Returning to the global economic situation, the DG of the financial institution welcomed the slowdown in inflation thanks to the combined effect of a resolute monetary policy, a relaxation of the constraints of the chain of supply and moderation of food and energy prices.
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However, Ms Georgieva warned, due to conflicts in some regions of the world, medium-term growth risks being “sluggish, insufficient to eradicate poverty in the world, nor to create the number of jobs we need ”.
To overcome these difficulties, the IMF CEO recommended that governments work to reduce debt and rebuild the reserves needed to face the next shock, “which will not take long to occur, and perhaps sooner than expected” .
Budgets, she advocated, must be consolidated in a “credible but progressive” way, noting that if budgetary reforms “are not easy”, they remain “necessary and can improve inclusion and opportunities”.
Supporting reforms, Ms Georgieva recommended three levels: ensuring that labor markets serve citizens; mobilize capital which is certainly abundant on a global scale, but often misplaced or poorly invested; and increase productivity, through improving governance, reducing administrative formalities and harnessing artificial intelligence.
The Annual Meetings of the IMF and the WB, which bring together delegations from around the world in the American federal capital from October 21 to 26, are being held in an environment punctuated by challenges and uncertainties.
They will be an opportunity for the two international financial institutions to discuss these issues and highlight their support mechanisms with a view to a more resilient global economy.
