“I am among those who know what are the consequences of a
Cold War: it is loss of talent and contribution to the world,” Kristalina
Georgieva said during a press conference at the official start of the World
Bank and IMF’s spring meetings.
“I don’t want to see that repeating,” she said, adding that
the world should “rationally accept there will be some cost, there will be some
fragmentation, but keep these costs low.”
Georgieva was born and raised in Bulgaria, a former Soviet
satellite state.
Multilateral institutions like the World Bank and IMF have
an important role to play in preventing the world from splintering into
different blocs with severe economic consequences, she said.
An IMF report earlier this week predicted that growing trade
fragmentation resulting from events like Brexit, the US-China trade war and the
Russian invasion of Ukraine, could make the global economy as much as seven
percent smaller than it otherwise would have been.
Policymakers had a crucial role to play to “defend the
interests” of their citizens, Georgieva said.
“If we fail to be more rational, then people everywhere will
be worse off,” she said.
Progress on World Bank reforms
Progress has been made on a number of key issues for the World
Bank and IMF, the Bank’s outgoing president, David Malpass, said earlier
Thursday at an event marking the official start of the spring meetings.
Member states agreed on a number of steps to boost the World
Bank’s financial capacity, he said, freeing it up to lend “as much as $50
billion of new financing” over the next decade.
French president Emmanuel Macron will host a summit in June
which will look to extend some of these new rules to other financial
institutions and build a “new financial framework,” the French finance minister
Bruno Le Maire told reporters at the IMF on Thursday morning.
Progress was also made during a debt roundtable discussion
on Wednesday, Malpass said. For the first time, these talks included not only
creditor countries but also the private sector, and representatives from
Zambia, a country in advanced talks on restructuring its debt.
The Bank and IMF’s leaders said progress had also been made
on replenishing lending facilities for low-income countries which have been
depleted by the twin impact of the Covid-19 pandemic and the Russian invasion
of Ukraine.
Ireland, Saudi Arabia, the UK, Portugal and Japan have all
already come forward with “substantial new pledges or contributions” towards
replenishing these funds in recent days, Georgieva said.
‘Stay the course’
Georgieva and Malpass both warned Thursday that inflation
remained too high in many countries around the world.
“We expect central banks to stay the course in the fight
against inflation, holding a tight stance to prevent a de-anchoring of
inflation expectations,” Georgieva said.
Governments also needed to work to reduce their budget
deficits, and do more to improve sluggish growth prospects for the world
economy in the medium term, she added.
In her remarks, Georgieva called on member states to push
through the structural transformations needed to speed up digital
transformation, improve the business environment in many countries, and
accelerate the green energy transformation.
“We estimate $1 trillion a year is needed just for renewable
energy and investment that can translate into growth and jobs,” she said. -AFP
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