Kristalina Georgieva discusses protracted high interest rates and first term dominated by two ‘unthinkable’ events
The IMF managing general, Georgieva Kristalina, described the war in Ukraine as a ‘big black cloud hanging over the world economy’.The IMF managing general, Georgieva Kristalina, described the war in Ukraine as a ‘big black cloud hanging over the world economy’.
Georgieva said there had been a “pile-up” of asset valuations before it dawned on businesses that it would take time for interest rates to start coming down. “So now inflation expectations have moved up, is there a risk of a sharp repricing and then financial stability considerations?” “So the scarring is there and when you look at the growth prospects they are weak. In the next five years we expect an average of 3% a year compared with 3.8% a year in the five years before Covid. We have wounds to heal and growth is simply not enough to do it and bring more prosperity to people.”
“Look at the impacts already: defence expenditure up. We had a peace dividend, but we don’t have it any more. It is gone, understandably, because we can no longer take peace for granted,” said Georgieva. Georgieva said the IMF had lent $160bn to help countries affected by the pandemic and a further $160bn in the aftermath of the invasion of Ukraine. She added that the IMF now needed richer countries to respond to a more “shock-prone world” by providing the resources to increase the size of the fund’s safety net. “Every shock hits the most vulnerable countries the most. They don’t have reserves. For them we are the insurer,” Georgieva said.
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