Resilience Ensuring Global Economic Stability

An Interview with Kristalina Georgieva, Managing Director, International Monetary Fund (IMF)

EDITORS’ NOTE Kristalina INSTITUTION BRIEF Created in 1945, rapidly disbursed over $30 billion in emergency Georgieva assumed her current the International Monetary Fund (imf. fi nancing to 75 countries in just four months – position on October 1, 2019. Before org) is an organization of 189 coun- an unprecedented response. Now, as the world joining the Fund, she was CEO of tries, working to foster global monetary starts to move toward recovery, we are acting the from January cooperation, secure fi nancial stability, as an “economic stabilizer” and working on key 2017 to September 2019, dur- facilitate international trade, promote issues like rising public debt, ensuring stability ing which time she also served high employment and sustainable eco- in the fi nancial sector, and how to boost job as Interim President of the nomic growth, and reduce poverty creation in countries and regions that are par- for three around the world. The IMF’s primary ticularly dependent on sectors that have been months. Previously, Georgieva purpose is to ensure the stability of the hit hard by the pandemic. helped shape the agenda of the international monetary system – the We have three key assets that have helped . She served as system of exchange rates and inter- us in these two roles: Vice Kristalina Georgieva national payments that enables coun- Our financial capacity enables us to act President for Budget and Human tries and their citizens to transact with quickly and decisively. Thankfully, after the Resources, overseeing the $175 billion bud- each other. The Fund’s mandate was updated in global financial crisis, our members had the get and 33,000 staff. Before that, she was 2012 to include all macroeconomic and fi nan- foresight to quadruple our lending capac- Commissioner for International Cooperation, cial sector issues that bear on global stability. ity from $250 billion to $1 trillion. We have Humanitarian Aid and Crisis Response, deployed around a quarter of this capacity, managing one of the world’s largest human- You assumed your role as Managing including through providing emergency fi nanc- itarian aid budgets. Prior to joining the Director of the IMF in October 2019. What ing, standby arrangements, debt relief and fl ex- European Commission, Georgieva worked excited you about this opportunity and how ible credit lines, and we stand ready to provide for 17 years at the World Bank, culminat- did your previous experience prepare you further assistance to our members. ing in her appointment as Vice President for this position? Our expertise enables us to analyze econo- and Corporate Secretary in 2008. She held My life has given me a broad perspective mies to identify risks and opportunities for our a number of other senior positions, includ- on how economics affects people’s lives. I was members and offer practical policy advice based ing World Bank Director for Sustainable born behind the Iron Curtain and experienced on global experience. Consider our COVID-19 pol- Development, World Bank Director for the the profound limitations of a centrally planned icy tracker - it covers the key economic responses Russian Federation, based in Moscow, World economy. After the collapse of communism in of 196 economies to the current crisis and allows Bank Director for Environment, and Director Eastern Europe, I lived through Bulgaria’s pain- policymakers to see how others are managing the for Environment and Social Development for ful transition to a market economy. I vividly crisis. This is available on our website. We have the East Asia and Pacific Region. She joined remember hyperinfl ation wiping out my moth- also ramped up our capacity development efforts the World Bank as an environmental econo- er’s life savings and getting up at 4:00 AM to buy for countries and enhanced our economic surveil- mist in 1993. Georgieva serves on many milk for my daughter. lance by incorporating epidemiological expertise international panels including as co-Chair Together with my work at the World Bank in our macroeconomic models. of the Global Commission on Adaptation and the European Commission, my experience And, finally, our vision. Being resilient to climate change, and as co-chair of the has given me this very clear understanding: tomorrow requires vision today, both when it Secretary-General’s High- macro decisions have micro impacts. Policy must comes to the challenges we may face, and the Level Panel on Humanitarian Financing. In always be about people, especially the poor and opportunities we may fi nd. Even as we urge 2010, she was named “European of the Year” the vulnerable who need help the most. countries not to withdraw policy support pre- and “Commissioner of the Year” by European My background also gives me an unwav- maturely in the next phase of the crisis, we are Voice for her leadership in the EU’s human- ering sense of pragmatic optimism. I have also thinking about building forward better itarian response to crises. She has authored observed how, with perseverance and work, toward a world that is fairer and more equita- and co-authored over 100 publications on hard times can turn into good times, and poten- ble, greener and more sustainable, smarter and, environmental and economic policy top- tially bad outcomes can be transformed into above all, more resilient. ics, including textbooks on macro- and good outcomes. Optimism must, of course, be What metrics will you use to judge your . Born in , Bulgaria, backed by action and I strongly believe in our leadership and the success of the IMF? Georgieva holds a PhD in economic science collective ability to make life better for people. As a leader, my role is to work with the Board and an MA in political economy and sociology So, to lead the IMF at a time when it has a criti- to set priorities and then make sure staff is highly from the University of National and World cal role to play, is both exciting and humbling. energized, with all the support and the resources Economy, Sofia, where she was an Associate What do you see as the IMF’s role in the they need to deliver. I am fortunate that the Fund Professor between 1977 and 1993. During world today? is blessed with a brilliant and diverse staff – a mix- her academic career, she was visiting fellow The IMF is at the center of the global fi nan- ture of people from different backgrounds who at the London School of Economics and at the cial safety net. In the fi rst phase of the crisis, we bring their experience and knowledge, and their Massachusetts Institute of Technology. worked as an “economic fi rst responder” and commitment, to serve our members. 22 LEADERS POSTED WITH PERMISSION. COPYRIGHT © 2020 LEADERS MAGAZINE, LLC VOLUME 43, NUMBER 4 “If there is one clear lesson from this crisis, it is the importance of building a resilient economy, because we live in a more shock-prone world. If you build strong buffers, you can put these to use when they are needed, and we have seen how countries with stronger underlying economic fundamentals have fared better during the crisis.”

It is our members and their citizens who three dimensions. First, as governments further How critical are collaboration and we serve who will ultimately judge whether the expand their fi scal support, they need to remain strong global alliances to building a IMF has been successful. If we succeed in our fully accountable to the taxpayer, spending what more resilient world? mission – to help ensure global economic sta- is needed but keeping the receipts. Countries The pandemic is a powerful reminder of the bility – this would translate into more and better also need to take advantage of the digital trans- need for solidarity in an interconnected world. jobs, sustainable and resilient economies, and formation to move governments to e-platforms Governments have taken extraordinary measures better health and education systems that create so that they can ensure effi cient and transparent to curb the spread of the disease and limit the opportunities for people to reach their poten- public spending, while taking action to cut red immediate economic damage. But even as gov- tial. That is our baseline and guiding principle – tape and helping private businesses to fl our- ernments are taking measures at home, they also policies to help people. ish. Second, policies must be environmentally need to strengthen their joint efforts because inter- The world is facing many challenges sustainable as well as fi scally sustainable. This national cooperation is critical to build resilience and crises. How critical is resilience in means supporting low-carbon and climate-resil- and preserve stability. Take trade – we have seen addressing these global issues? ient growth and being smart about allocating some governments taking measures to limit the If there is one clear lesson from this cri- additional public spending to these priorities. movement of key items like drugs, protective gear sis, it is the importance of building a resilient Finally, all governments need to embrace the and ventilators. Curbs on some food supply lines economy, because we live in a more shock- concept of investing in people – social safety are also starting to appear, despite strong over- prone world. If you build strong buffers, you nets to catch people if they fall, and social safety all supply. What may make sense in an isolated can put these to use when they are needed, ropes to help people pull themselves back up emergency can be severely damaging in a global and we have seen how countries with stronger again. That means spending more and spend- crisis, especially for poorer and more vulnerable underlying economic fundamentals have fared ing better on schools, training, and reskilling. countries, and we have called on governments better during the crisis. For example, we know It means expanding well-targeted social pro- to refrain from imposing trade restrictions and to emerging markets and developing countries will grams to reach the most vulnerable. It means remove those put in place this year. be the hardest hit by this crisis – they face the empowering women by reducing labor market The good news is that we do see coop- biggest challenges and steepest trade-offs. Last discrimination. Such investment will need to be eration among countries, like the EU agreement March, around $100 billion left emerging and funded by more equitable taxation, especially on a 750 billion euros recovery package, and we developing economies, yet following the mas- given enhanced public debt levels. If we seize have seen good cooperation between multilateral sive liquidity injection by central banks, emerg- these opportunities, we will emerge from this institutions and among the international commu- ing market sovereigns were able to go back crisis with a global economy that is not just nity. Early in the crisis, together with World Bank to the markets quickly with $83 billion issued more resilient, but also more effi cient, more President , I called on offi cial bilat- March to June. Year-to-date issuance in 2020 inclusive, and more sustainable. eral creditors to suspend debt service payments stands at $137 billion, or $30 billion higher than from the poorest countries. The responded the previous record for this point in time in the with the Debt Service Suspension Initiative calendar year (in 2018). (DSSI) that means bilateral offi cial creditors will More broadly, public investments can also suspend debt service payments from the poorest boost resilience – think of the lives saved by countries that request it. This commendable ini- strong public health investments, the jobs pre- tiative should be extended, and we should also served by digital skills and infrastructure, and consider how to encourage greater private sec- the services maintained by harnessing technol- tor participation and measures to improve debt ogy. An example is Rwanda that already had a transparency. Beyond the DSSI, there is a need 93 percent fi nancial inclusion rate before the “The IMF is at the to fi ll gaps in the international debt architecture pandemic, so the government could build on and think about more comprehensive debt relief that foundation to roll out enhanced social for many countries. safety nets. center of the global From an IMF perspective, we have seen This pandemic is far from the last crisis we signifi cant international cooperation through- will see. Climate change could devastate econo- fi nancial safety net.” out this crisis. We have received strong support mies, widen inequality and displace millions of from across our membership as we have acted people. For this and other global crises to come, at unprecedented speed to help countries that we must build resilience now. have been hit hard by the crisis, and through- What are the key factors getting in the out this period, we have heard all our member way of making the world more resilient? countries say they want the IMF to be strong. After the fi nancial crisis, the international We are not going to get out of this crisis one community focused on strengthening the bank- country at a time and in my experience, the ing sector to improve its resilience. Today, we world is willing and able to come together for must expand the concept of resilience across the common good.• VOLUME 43, NUMBER 4 POSTED WITH PERMISSION. COPYRIGHT © 2020 LEADERS MAGAZINE, LLC LEADERS 23