IMF Managing Director Kristalina Georgieva at the World Government Summit, Dubai, UAE 3-5 February 2026. Credit: International Monetary Fund (IMF)

By Kristalina Georgieva
DUBAI, United Arab Emirates, Feb 10 2026 (IPS)

It is a pleasure for me to join His Excellency, Minister Al Hussaini in welcoming you to this important dialogue here in the United Arab Emirates—a fast-growing global AI hub. A recent Microsoft study reports that 64 percent of the UAE’s working age population uses AI, which is the highest rate globally.

This illustrates the dynamism we see in the region—and the major investments and partnerships that some of the world’s biggest tech companies are making here.

Why such a huge commitment to this region? Because the UAE and the members of the GCC all understand just how transformative AI can be. They have made systemically significant investments in human capital over the last decades. IMF estimates show that, with the right measures in place, AI could fuel a boost to global productivity of up to 0.8 percentage points per year. This could raise global growth to levels exceeding those of the pre-pandemic period.

Here in the Gulf region, AI could boost non-oil GDP in Gulf countries by up to 2.8 percent. For economies that have long been dependent on hydrocarbon exports, this presents an enormous opportunity to diversify and build new sources of growth.

Now, major technology changes often bring disruption. And sure enough, we can expect disruption from AI. Especially to labor markets. On average, 40 percent of jobs globally will be impacted by AI—either upgraded or eliminated or transformed. For advanced economies, 60 percent of jobs will be affected. This is like a tsunami hitting the labor market.

We are already seeing the evidence: about one in 10 job postings in advanced economies now require at least one new skill. Workers with in-demand skills will likely see productivity and wage gains. This will create more demand for services, and increase employment and wages among low-skilled workers. But middle-skilled jobs will be squeezed.

That means that young people and the middle class will be hit hardest.

We can expect to see a similar divergence between countries. Those with an economic structure conducive to AI adoption—that is, strong digital infrastructure, more skilled labor forces, and robust regulatory frameworks—are likely to experience the largest and fastest benefits. Countries that don’t may get left behind. This is why we gathered here today. AI looks unstoppable.

But whether or not countries can successfully capitalize on AI’s enormous promise is yet to be determined. And this will largely depend on the policy regimes they put in place. So then, what must be done to ensure AI translates into broad-based prosperity for this region?

First, macro policies. Investment and innovation in AI will boost growth. Fiscal policies can support this by strengthening tax systems and by funding research, reskilling, or sector-based training programs. However, tax systems should not encourage automation at the expense of people. Likewise, effective financial regulation will be essential to ensure financial market efficiency and improved risk management.

Second, guardrails. AI needs to be regulated to ensure it’s safe, fair, and trustworthy—but without stifling innovation. Different countries are taking different approaches, ranging from risk-based frameworks to high-level principles. Whatever approach they take, it’s critical that countries coordinate.

That brings me to my third point: cooperation and partnerships. Scale is a big advantage in AI. But you can’t get scale without cooperation among governments, AI researchers and developers, including when it comes to data sharing and knowledge transfer.

Let me conclude. AI will transform our economies. It will present immense opportunities and pose significant risks. And it falls to you, the world’s policymakers, to ensure that the opportunities are maximized for your countries and the risks controlled.

IPS UN Bureau

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Credit: X-poser/Adobe Stock

By Kristalina Georgieva
WASHINGTON DC, Jan 16 2024 (IPS)

We are on the brink of a technological revolution that could jumpstart productivity, boost global growth and raise incomes around the world. Yet it could also replace jobs and deepen inequality.

The rapid advance of artificial intelligence has captivated the world, causing both excitement and alarm, and raising important questions about its potential impact on the global economy.

The net effect is difficult to foresee, as AI will ripple through economies in complex ways. What we can say with some confidence is that we will need to come up with a set of policies to safely leverage the vast potential of AI for the benefit of humanity.

Reshaping the Nature of Work

In a new analysis, IMF staff examine the potential impact of AI on the global labor market. Many studies have predicted the likelihood that jobs will be replaced by AI. Yet we know that in many cases AI is likely to complement human work. The IMF analysis captures both these forces.

Kristalina Georgieva

In advanced economies, about 60 percent of jobs may be impacted by AI. Roughly half the exposed jobs may benefit from AI integration, enhancing productivity. For the other half, AI applications may execute key tasks currently performed by humans, which could lower labor demand, leading to lower wages and reduced hiring. In the most extreme cases, some of these jobs may disappear.

In emerging markets and low-income countries, by contrast, AI exposure is expected to be 40 percent and 26 percent, respectively. These findings suggest emerging market and developing economies face fewer immediate disruptions from AI.

At the same time, many of these countries don’t have the infrastructure or skilled workforces to harness the benefits of AI, raising the risk that over time the technology could worsen inequality among nations.

AI could also affect income and wealth inequality within countries. We may see polarization within income brackets, with workers who can harness AI seeing an increase in their productivity and wages—and those who cannot falling behind.

Research shows that AI can help less experienced workers enhance their productivity more quickly. Younger workers may find it easier to exploit opportunities, while older workers could struggle to adapt.

The effect on labor income will largely depend on the extent to which AI will complement high-income workers. If AI significantly complements higher-income workers, it may lead to a disproportionate increase in their labor income. Moreover, gains in productivity from firms that adopt AI will likely boost capital returns, which may also favor high earners. Both of these phenomena could exacerbate inequality.

In most scenarios, AI will likely worsen overall inequality, a troubling trend that policymakers must proactively address to prevent the technology from further stoking social tensions. It is crucial for countries to establish comprehensive social safety nets and offer retraining programs for vulnerable workers. In doing so, we can make the AI transition more inclusive, protecting livelihoods and curbing inequality.

An Inclusive AI-Driven World

AI is being integrated into businesses around the world at remarkable speed, underscoring the need for policymakers to act. To help countries craft the right policies, the IMF has developed an AI Preparedness Index that measures readiness in areas such as digital infrastructure, human-capital and labor-market policies, innovation and economic integration, and regulation and ethics.

The human-capital and labor-market policies component, for example, evaluates elements such as years of schooling and job-market mobility, as well as the proportion of the population covered by social safety nets. The regulation and ethics component assesses the adaptability to digital business models of a country’s legal framework and the presence of strong governance for effective enforcement.

Using the index, IMF staff assessed the readiness of 125 countries. The findings reveal that wealthier economies, including advanced and some emerging market economies, tend to be better equipped for AI adoption than low-income countries, though there is considerable variation across countries.

Singapore, the United States and Denmark posted the highest scores on the index, based on their strong results in all four categories tracked.

Guided by the insights from the AI Preparedness Index, advanced economies should prioritize AI innovation and integration while developing robust regulatory frameworks. This approach will cultivate a safe and responsible AI environment, helping maintain public trust.

For emerging market and developing economies, the priority should be laying a strong foundation through investments in digital infrastructure and a digitally competent workforce.

The AI era is upon us, and it is still within our power to ensure it brings prosperity for all.

Kristalina Georgieva is a Bulgarian economist serving as the 12th managing director of the International Monetary Fund, since 2019.

— For more on artificial intelligence and the economy, see the December issue of Finance & Development, the IMF’s quarterly magazine.

IPS UN Bureau

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Health workers on Bwama Island on Lake Bunyonyi in Uganda prepare to administer COVID-19 vaccines. “The threat of a third wave in Africa is real and rising”, said Dr Matshidiso Moeti, WHO Regional Director for Africa. “Our priority is clear – it’s crucial that we swiftly get vaccines into the arms of Africans at high risk of falling seriously ill and dying of COVID-19.” Credit: UNICEF/Catherine Ntabadde

By Kristalina Georgieva and Abebe Aemro Selassie
WASHINGTON DC, Jun 30 2021 (IPS)

Sub-Saharan Africa is in the grips of a third wave of COVID-19 infections that threatens to be even more brutal than the two that came before.

This is yet more evidence of a dangerous divergence in the global economy. One track for countries with good access to vaccines, where strong recoveries are taking hold. And another for those countries that are still waiting and at risk of falling further behind.

The growth of infections in sub-Saharan Africa is now the fastest in the world, with an explosive trajectory that is outpacing the record set in the second wave. At this pace, this new wave will likely surpass previous peaks in a matter of days—and in some countries, infections are already more than double, or even triple, their January peaks.

The latest (delta) variant—reportedly 60 percent more transmissible than earlier variants—has been detected in 14 countries.

When the pandemic first hit, quick action by policymakers helped prevent infection rates seen elsewhere around the world. But it pushed already strained local health systems to the breaking point.

Only six months after the initial crisis, the region experienced a second wave that swiftly outpaced the scale and speed of the first. Now, another six months on, sub-Saharan Africa faces its third devastating wave.

The only way for the region to break free from this vicious pandemic cycle is to swiftly implement a widespread vaccination program.

A still-vulnerable region

The sheer speed of this third wave highlights the difficulty policymakers in sub Saharan Africa face in heading off a crisis once it gets under way. In Namibia, for example, new cases reached the previous January peak within only two weeks, and tripled another two weeks later. For many countries, by the time a new surge is identified, it may already be too late.

And the options employed during previous waves may no longer be feasible. The re-imposition of containment measures would likely come at too high an economic and social cost, and is simply unsustainable—and unenforceable—over a prolonged period.

Looking back, most sub-Saharan African countries entered the second wave in a more difficult economic position than the first, with shrinking fiscal resources to protect the vulnerable, additional millions thrown into poverty, and depleted household balance sheets.

While some countries have taken steps to improve preparedness, unfortunately, very few have had sufficient resources—or time—to strengthen public health systems.

And, now, the scale of the current wave is once again threatening to overwhelm local health systems. News reports across the region point to overwhelmed hospitals. The sick are dying while waiting for a bed. Non-emergency surgeries have been canceled to preserve space for COVID-19 patients.

And military hospitals have been opened for civilian use. Oxygen has become a key constraint, with supply already failing to keep up with the demand for critically-ill patients. The region’s scarce health workers continue to be at risk.

The risks of leaving Africa behind

The vaccine rollout in sub-Saharan Africa remains the slowest in the world. Less than 1 adult in every hundred is fully vaccinated, compared to an average of over 30 in more advanced economies. This means even most essential frontline workers continue to work unprotected. In this context, some of the world’s more fortunate countries have stockpiled enough vaccines to cover their populations many times over.

Without significant, upfront, international assistance—and without an effective region-wide vaccination effort—the near-term future of sub-Saharan Africa will be one of repeated waves of infection, which will exact an ever-increasing toll on the lives and livelihoods of the region’s most vulnerable, while also paralyzing investment, productivity, and growth.

In short, without help the region risks being left further and further behind.

And the longer the pandemic is left to ravage Africa, the more likely it is that ever more dangerous variants of the disease will emerge. Vaccination is not simply an issue of local lives and livelihoods. It is also a global public good. For every country—everywhere—the most durable vaccine effort is one that covers everyone, in every country.

What can be done to speed up the vaccine effort?

IMF staff has put forward a global proposal that targets vaccinating at least 40 percent of the total population of all countries by end-2021, and at least 60 percent by the first half of 2022.

Africa is expected to receive 30 percent vaccination coverage through COVAX and another 30 percent coverage through the African Vaccine Acquisition Task Team (AVATT), established by the African Union under the leadership of President Cyril Ramaphosa.

We see seven key steps to ensure these vaccination targets are met:

• • First, it is essential to deliver vaccines to sub Saharan Africa as soon as possible. Given that much of the global supply of vaccines for 2021 has already been bought up, many countries will be forced to wait until 2022 to get them. So, the fastest way to get vaccines to sub Saharan Africa is for advanced economies to share their stockpiles bilaterally or through multilateral initiatives. COVAX has already received pledges for over half a billion doses. But these need to turn into actual deliveries as soon as possible to make a difference. Indeed, the goal should be to get a quarter of a billion doses to the region by September.

• • Second, vaccine manufacturers should speed up supply to Africa for the rest of this year. Advanced economies with vaccine manufacturing capabilities should encourage their manufacturers to do so, especially when demand at home is falling short of supply.

• • Third, AVATT should be fully financed to ensure coverage of 30 percent of the African Union population. This requires an estimated $2 billion, that would for example allow AVATT to execute its optional contract of 180 million doses with J&J.

• • Fourth, remove cross-border export restrictions on raw materials and finished vaccines. This includes ensuring that the Aspen facility in South Africa—a key supplier to AVATT—is operational at full capacity, and resuming exports from the Serum Institute of India to COVAX. African vaccination plans rely heavily on these two facilities.

• • Fifth, financing of at least $2.5 billion and upfront planning will also be critical to ensure health systems can deliver shots-in-arm promptly as vaccine supply ramps up. Many countries in the region, including eSwatini, Ghana, Kenya, Namibia, and Rwanda, have quickly and effectively administered their limited supplies. These countries, along with others in the region, have had to place their vaccine campaigns on hold as they wait for the arrival of the new supplies that they have recently procured at comparatively high cost or the donated supplies from other countries’ stockpiles. It is these shortages—rather than the ability to administer shots—that has so far been the biggest constraint. But when supply picks up, health systems must be prepared to vaccinate as many people as possible. And this is doable as the experience in many developing countries show—the likes of Seychelles, Mongolia, Bhutan, and Maldives impressively scaled-up vaccinations quickly once their vaccine supplies arrived.

• • Alongside vaccination efforts, countries must also ensure that their public health systems are able to handle an influx of cases. This includes accelerating the acquisition of vital COVID-19 health tools, including therapeutics, oxygen, and personal protective equipment. No matter what the speed of vaccinations, these supplies are needed now to help save lives. This will require urgent grant financing to pre-emptively procure and deliver a minimum package of critical COVID-19 Health Tools to address the rising health and economic costs arising from the surge in cases driven by the delta variant.

• Finally, the magnitude of the region’s financing needs requires a coordinated effort on the part of the international community. Few countries have the fiscal space to finance this effort on their own, considering the region’s already elevated debt levels and already pressing spending needs. Most of the international community’s financial assistance will need to come in the form of grants or concessional loans. With our colleagues from the World Bank, WHO, WTO, and others, the IMF has formed a special task force to ensure that countries get the resources and vaccines they need.

As always, Africa can count on the IMF. We remain deeply committed to all countries in the region. We’ve ramped up our lending to sub Saharan Africa—last year it was more than 13 times our annual average—and support to increase our access limits will allow us to scale up our zero-interest lending capacity.

And the unprecedented $650 billion new SDR allocation, far and away the largest in the Fund’s history, once approved will make $23 billion available to member countries in sub Saharan Africa.

Yet the gravity and urgency of the situation requires the global community working together. We all have a stake in this. So, in all countries—advanced and emerging alike—we can reclaim our physical and economic health from the pandemic. And so that sub Saharan Africa can resume its path toward a more prosperous future.

Kristalina Georgieva is the managing director of the International Monetary Fund (IMF). Abebe Aemro Selassie is the Director of the IMF’s African Department.

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Indigenous schoolchildren in Bolivia's Andes highlands. Credit: Marisabel Bellido/IPS

By Kristalina Georgieva
WASHINGTON, Jun 12 2020 (IPS)

The COVID-19 crisis is inflicting the most pain on those who are already most vulnerable. This calamity could lead to a significant rise in income inequality. And it could jeopardize development gains, from educational attainment to poverty reduction. New estimates suggest that up to 100 million people worldwide could be pushed into extreme poverty, erasing all gains made in poverty reduction in the past three years.

That is why policymakers must do everything in their power to promote a more inclusive recovery, one that benefits all segments of society.

Our new research, prepared jointly with the World Bank for the G20, focuses on how to increase people’s access to opportunities, no matter who they are and where they are from. More equitable access to opportunities is associated with stronger and more sustainable growth and higher income gains for the poor. But unlocking the full potential of all individuals is not an easy task.

As they move forward, all governments will need to gear up for a more inclusive recovery. This means taking the right measures, especially on fiscal stimulus, education, and fintech. And it means sharing ideas, learning from others, and fostering a greater sense of solidarity

The reality is that low-income households face higher health risks from the virus. They bear the brunt of record-high unemployment and are less likely to benefit from distance learning. Children’s nutrition may also be harmed by the disruption to school-provided meals. According to UN estimates, more than half a billion children worldwide have lost their access to education as a result of coronavirus lockdowns. Many won’t return to the classrooms after the pandemic, with girls more likely than boys to drop out.

These inequalities are truly shocking, but not unexpected. We know from experience and recent IMF analysis that major epidemics often exacerbate pre-existing income inequality.

A policy response like no other

The good news is that governments around the world have deployed extraordinary policy measures to save lives and protect livelihoods. These include extra efforts to protect the poor, with many countries stepping up food aid and targeted cash transfers. Globally, fiscal actions so far amount to about $10 trillion.

But given the severity of the crisis, significant further efforts are essential. This includes taking the measures needed to avoid a scarring of the economy, including from job losses and higher inequality. It is clear that increasing access to opportunities is now more critical than ever if we are to avoid persistent increases in inequality.

With this in mind, I would like to highlight three priorities:

1. Use fiscal stimulus wisely

Substantial fiscal stimulus will have to be deployed during the recovery phase to boost growth and employment. We know from the global financial crisis that countries that experienced larger output losses relative to the pre-crisis trend tended to have higher increases in inequality.

Yet securing a return to growth is not enough. Let’s remember the post-financial crisis reforms and investments that made banking systems more resilient. We will need a similar surge in reforms and investments during the recovery phase to significantly improve the economic prospects of the most vulnerable.

So, we will need a fiscal stimulus that delivers for people. This means scaling up public investment in health care to protect the most vulnerable and minimize the risks from future epidemics. It also means strengthening social safety nets; expanding access to quality education, clean water, and sanitation; and investing in climate-smart infrastructure. Some countries could also expand access to high-quality childcare, which can boost female labor force participation and long-term growth.

These efforts are critical to achieve the Sustainable Development Goals. But how can we significantly scale up spending when so many countries are now facing rising public debt? Public debt in emerging markets has risen to levels not seen in 50 years.

The IMF and the World Bank have championed debt service suspension as a fast-acting measure for countries that lack the financial resources to adequately respond to the crisis. The G20 has responded by agreeing to suspend repayment of official bilateral credit for the poorest countries, from May 1 through the end of 2020.

Over the medium term, there will be room to improve the efficiency of spending and mobilize higher public revenue. There will also be room for tax reform: for example, some advanced and emerging economies could raise their top personal income tax rates without slowing growth. Countries could ensure that the corporate tax system captures an appropriate part of the unusual gains received by the “winners” of the crisis, including perhaps from digital activities. And there should be a concerted effort to combat illicit flows and close tax loopholes, both domestically and internationally.

2. Empower the next generation through education

The virus-related disruption to education has left millions of children at risk of “learning poverty,” which means being unable to read and comprehend a simple text by age 10. Driven by poor access to quality schooling, learning poverty is already too high, especially in emerging markets and low-income nations.

We are also concerned about the long-term effects of the crisis on income and education gaps. In our research, we looked at the link between education and inequality. A 10-point increase in a country’s Gini coefficient (with such increases observed in some economies around the time of the global financial crisis) is associated with significantly lower educational attainment of about half a year. This could reduce lifetime earnings and cause income and opportunity gaps to become persistent across generations.

In other words, safeguarding our future means safeguarding our children. That is why we need more investment in education—not just spending more on schools and distance-learning capacity, but also improving the quality of education and the access to life-long learning and re-skilling.

These efforts can pay large dividends in terms of growth, productivity, and living standards. Simulations, based on a model reflecting an economy like Brazil, show that reducing the educational attainment gap by a quarter, relative to the OECD average, could boost economic output by more than 14 percent.

3. Harness the power of financial technology

COVID-19 has triggered a mass migration from analog to digital. But not everyone has seen the benefits; and the growing digital divide is set to become one of the legacies of the crisis.

What can policymakers do? A key priority must be to broaden the access of low-income households and small businesses to financial products, which will allow households to smooth consumption in the face of shocks and businesses to undertake productive investments. This “inclusion revolution” is now gaining momentum as governments are providing emergency cash transfers in record amounts. For example, in Pakistan and Peru, new support programs cover one-third of the population.

Reaching the most vulnerable can be challenging in developing economies, where nearly 70 percent of employment is informal. But this is where fintech opportunities abound. Think of the fact that about two-thirds of all unbanked adults (1.1 billion people) have a mobile phone, and one-quarter have access to the internet. Moving routine cash payments by governments into accounts could reduce the number of unbanked adults by 100 million globally, and even bigger opportunities exist in the private sector.

Of course, governments also need to manage fintech risks. Reforms are needed to promote competition, enhance consumer protection, and fight money laundering. Finding the right balance will be critical for lower inequality and growth.

Our research shows that greater access to finance and technology is associated with higher intergenerational income mobility. And we have estimated that there is a 2- to 3-percentage-point GDP growth difference over the long term between financially inclusive countries and their less inclusive peers.

In all these areas, the IMF is working with the World Bank and many other partners to support countries in this time of crisis. We are deeply committed to helping vulnerable groups through our hands-on technical assistance, policy advice, and lending programs. And we have increased our focus on social spending issues, including safety nets, health and education.

As they move forward, all governments will need to gear up for a more inclusive recovery. This means taking the right measures, especially on fiscal stimulus, education, and fintech. And it means sharing ideas, learning from others, and fostering a greater sense of solidarity.

If there is one lesson from this crisis, it’s that our society is only as strong as its weakest member. This should be our compass to a more resilient post-pandemic world.

Excerpt:

By Kristalina Georgieva
WASHINGTON DC, Jun 2 2020 (IPS)

Looking back to the start of 2020, the world has changed almost beyond recognition. To protect public health, the global economy was put into stasis. Shops closed, factories were mothballed, and people’s freedom of movement was severely curtailed.

No country has escaped the health, economic, and social impacts of the COVID-19 crisis. Tragically, more than 260,000 people have died and millions have been infected. The IMF is projecting global economic activity to decline on a scale not seen since the Great Depression. It is truly a crisis like no other.

Kristalina Georgieva. Credit: IMF

Despite the bleak outlook, I am hopeful for the future. A crisis often brings the best out in people—I have seen it firsthand in countries hit by wars and natural disasters.

This is happening already in the fight against the pandemic as doctors and nurses around the world put saving lives of others ahead of their own lives. And governments are stepping up in an unprecedented manner. To fight the pandemic they have combined dramatic public health interventions with fiscal measures amounting to about $8.7 trillion. Central banks have undertaken massive liquidity injections, and richer countries have stepped up to support poorer nations.

Record speed

The IMF has responded at record speed. We doubled our emergency rapid-disbursing capacity to meet expected demand of about $100 billion—and by end-May the IMF had approved financing for 60 countries, a record. We also established a new short-term liquidity line, and we took steps to triple our concessional funding, targeting $17 billion in new loan resources for our Poverty Reduction and Growth Trust, which helps poorer economies.

To help vulnerable members through rapid debt-service relief on their IMF obligations we reformed our Catastrophe Containment and Relief Trust. Working with the World Bank, we catalyzed suspension of official bilateral debt repayments for the poorest countries through the end of 2020.

While moving at speed, the IMF has consistently emphasized its collective commitment and steadfast support for its members in addressing governance vulnerabilities. Corruption drains resources away from priorities like public health, social protection, distance learning, and other essential services. Distorted spending priorities will undermine the recovery and long-term efforts to promote sustainable, inclusive growth, or raise productivity and living standards. Our message to governments is clear: do whatever you can, but make sure you keep the receipts. We don’t want accountability and transparency to take a back seat. In practice, this means support for countries in adopting a range of public financial management, anti-corruption, and anti-money-laundering measures.

During the crisis peak, governments have rightly been focused on saving lives and preserving livelihoods. In places where new infections and deaths are in decline, governments are considering how best to reopen the economy in a responsible fashion. In developing economies with large numbers of hand-to-mouth households, prolonged containment measures may not be a viable option and consideration needs to be given as to how to reopen safely given more limited health care capacity.

In the early phase at least, the recovery will be unusual as uncertainty remains about the path of the virus, potential vaccines, and therapeutics. This could hamper the rebound of investment and consumption, especially if infection rates climb back up as containment measures are eased.

Nonetheless, the recovery will share several features with previous episodes. Countries with stronger macroeconomic fundamentals, social cohesion, and safety nets are likely to experience faster and stronger recoveries. Existing vulnerabilities such as high sovereign debt; weak corporate, household, and bank balance sheets; and limited policy credibility will hinder the recovery. Governments will face the challenge of phasing out crisis-related policies. And more than ever, global cooperation will be vital, facilitated by international institutions, to coordinate actions, share data, protect supply chains, and support more vulnerable countries.

A green recovery

From a position nearing economic stasis there is nonetheless an opportunity to use policies to reshape how we live and to build a world that is greener, smarter, and fairer.

Greener: The current health crisis reminds us how vulnerable each person is in the face of the incredible power of nature. Yet just as scientists warned against the risk of a pandemic—a “black swan” event—they have also warned us of the terrible consequences of catastrophic climate change. We cannot turn back the COVID-19 clock, but we can invest in reducing emissions and adapting to new environmental conditions.

As economies stabilize, we have the chance to reorient them to prioritize sustainability and resilience alongside efficiency and profitability. The right policies will help allocate resources to investments that support public goods like clean air, flood defenses, resilient infrastructure, and renewable energy. Meanwhile, lower commodity prices can create the fiscal space to phase out regressive fuel subsidies that increase carbon emissions. The payoff would be considerable: in just the energy sector, a low-carbon transition could require $2.3 trillion in investment every year for a decade, bringing growth and jobs during the recovery phase.

Smarter: Through necessity many of us have been working remotely and using technology to remain productive. We have traveled less, consumed fewer resources, and introduced more agile business processes. While schools, businesses, and institutions will likely formalize some of the smarter ways of working that have proved successful, the crisis has thrown light on the importance of investing in robust digital infrastructure and policy frameworks.

In 2018, the IMF and the World Bank Group launched the Bali Fintech Agenda to help countries harness the benefits of rapid advances in financial technology while managing its risks. We are accelerating our work with members to broaden the digital transformation so that its benefits are shared even more widely. Well-managed fintech, for example, can help end financial exclusion for the 1.7 billion people in developing economies who have no access to banking.

Fairer: IMF research has also shown that lower income inequality is associated with stronger and more sustainable growth, yet many social disparities have become more pronounced during the Great Lockdown. For example, informal workers in unregulated sectors or outside the tax system are twice as likely to belong to poor households. These same workers typically have no access to sick leave or unemployment benefits, and their access to health benefits is often precarious.

As governments ramp up spending to support individuals, businesses, and communities, there is an opportunity to build fairer societies and economies by investing in people. That means spending more and spending better on schools, training, and reskilling. It means expanding social programs that are well targeted to reach the most vulnerable. And it means empowering women by reducing labor market discrimination. Such investment will need to be funded by more equitable taxation, especially given enhanced public debt levels stemming from the crisis.

A new spirt of solidarity

At a large and small scale we are helping each other. The staff of the IMF has made it possible for billions of dollars to support the world’s most vulnerable people. They also have cooked meals for the vulnerable in our own community and have looked after neighbors who are sick.

It is this solidarity that makes me hopeful for the future. The IMF has already shown its mettle as an economic first responder during this crisis. As we enter the next phase, I am determined that we will support our members however we can—through policy advice, financing, and capacity development. Together, we will take the chance to build a better world.

Excerpt:

By Kristalina Georgieva
WASHINGTON DC, Apr 22 2020 (IPS)

I have been saying for a while that this is a ‘crisis like no other.’ It is:

• • More complex, with interlinked shocks to our health and our economies that have brought our way of life to an-almost complete stop;

• • More uncertain, as we are learning only gradually how to treat the novel virus, make containment most effective, and restart our economies; and

• Truly global. Pandemics don’t respect borders, neither do the economic shocks they cause.

Credit: IMF

The outlook is dire. We expect global economic activity to decline on a scale we have not seen since the Great Depression.

This year 170 countries will see income per capita go down – only months ago we were projecting 160 economies to register positive per capita income growth.

Actions taken

Exceptional times call for exceptional action. In many ways, there has been a ‘response like no other’ from the IMF’s membership.

Governments all over the world have taken unprecedented action to fight the pandemic—to save lives, to protect their societies and economies. Fiscal measures so far have amounted to about $8 trillion and central banks have undertaken massive (in some cases, unlimited) liquidity injections.

For our part, the IMF has $1 trillion lending capacity – 4 times more than at the outset of the Global Financial Crisis—at the service of its 189 member countries. Recognizing the characteristics of this crisis—global and fast-moving such that early action is far more valuable and impactful—we have sought to maximize our capacity to provide financial resources quickly, especially for low-income members.

In this regard, we have strengthened our arsenal and taken exceptional measures in just these two months.

These actions include:
• Doubling the IMF’s emergency, rapid-disbursing capacity to meet expected demand of about $100 billion. 103 countries have approached us for emergency financing, and our Executive Board will have considered about half of these requests by the end of the month.
• Reforming our Catastrophe Containment and Relief Trust, to help 29 of our poorest and most vulnerable members—of which 23 are in Africa—through rapid debt service relief, and we are working with donors to increase our debt relief resources by $1.4 billion. Thanks to the generosity of the UK, Japan, Germany, the Netherlands, Singapore, and China, we are able to provide immediate relief to our poorest members.
• Aiming to triple our concessional funding via our Poverty Reduction and Growth Trust for the most vulnerable countries. We are seeking $17 billion in new loan resources and, in this respect, I am heartened by pledges from Japan, France, UK, Canada, and Australia promising commitments totaling $11.7 billion, taking us to about 70 percent of the resources needed towards this goal.
• Supporting a suspension of official bilateral debt repayments for the poorest countries through end 2020—a ground-breaking accord among G20 countries. This is worth about $12 billion to nations most in need. And calling for private sector creditors to participate on comparable terms—which could add a further $8 billion of relief.
• Establishing a new short-term liquidity line that can help countries strengthen economic stability and confidence.

Kristalina Georgieva

This is the package of actions that the International Monetary and Financial Committee endorsed last week at our virtual Spring Meetings.

It represents a powerful policy response. Above all, it enables the IMF to get immediate, ‘here and now’ support to countries and people in desperate need. Today.

Preventing a protracted recession

But there is much more to be done and now is the time to look ahead. To quote a great Canadian, Wayne Gretzky: “Skate to where the puck is going, not where it has been.”

We need to think hard about where this crisis is headed and how we can be ready to help our member countries, being mindful of both risks and opportunities. Just as we responded strongly in the initial phase of the crisis to avoid lasting scars for the global economy, we will be relentless in our efforts to avoid a painful, protracted recession.

I am particularly concerned about emerging markets and developing countries.

They have experienced the sharpest portfolio flow reversal on record, of about $100 billion. Those dependent on commodities have been further shocked by plummeting export prices. Tourism-dependent countries are experiencing a collapse of revenues, as are those relying on remittances for income support.

For emerging economies, the IMF can engage through our regular lending instruments, including those of a precautionary nature. This may require considerable resources if further market pressures arise.

To prevent them from spreading, we stand ready to deploy our full lending capacity and to mobilize all layers of the global financial safety net, including whether the use of SDRs could be more helpful.

For our poorest members, we need much more concessional financing. With the peak of the outbreak still ahead, many economies will require significant fiscal outlays to tackle the health crisis and minimize bankruptcies and job losses, while facing mounting external financing needs.

But more lending may not always be the best solution for every country. The crisis is adding to high debt burdens and many could find themselves on an unsustainable path.

We therefore need to contemplate new approaches, working closely with other international institutions, as well as the private sector, to help countries steer through this crisis and emerge more resilient.

And the IMF, like our member countries, may need to venture even further outside our comfort zone to consider whether exceptional measures might be needed in this exceptional crisis.

Preparing for recovery

To help lay the foundations for a strong recovery, our policy advice will need to adapt to evolving realities. We need to have a better understanding of the specific challenges, risks and tradeoffs facing every country as they gradually restart their economies.

Key questions include how long to maintain the extraordinary stimulus and unconventional policy measures, and how to unwind them; dealing with high unemployment and ‘lower-for-longer’ interest rates; preserving financial stability; and, where needed, facilitating sectoral adjustment and private sector debt workouts.

We also must not forget about long-standing challenges that require a collective response, such as reigniting trade as an engine for growth; sharing the benefits of fintech and digital transformation which have demonstrated their usefulness during this crisis; and combating climate change—where stimulus to reinforce the recovery could also be guided to advance a green and climate resilient economy.

Finally, in the new post-COVID-19 world, we simply cannot take social cohesion for granted. So, we must support countries’ efforts in calibrating their social policies to reduce inequality, protect vulnerable people, and promote access to opportunities for all.

This is a moment that tests our humanity. It must be met with solidarity.

There is much uncertainty about the shape of our future. But we can also embrace this crisis as an opportunity—to craft a different and better future together.

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Kristalina Georgieva. Credit: IMF

By Kristalina Georgieva
WASHINGTON DC, Dec 5 2019 (IPS)

When I think of the incredible challenges we must confront in the face of a changing climate, my mind focuses on young people. Eventually, they will be the ones either to enjoy the fruits or bear the burdens resulting from actions taken today.

I think of my 9-year-old granddaughter. By the time she turns 20, she may be witness to climate change so profound that it pushes an additional 100 million people into poverty.

By the time she turns 40, 140 million may become climate migrants—people forced to flee homes that are no longer safe or able to provide them with livelihoods. And if she lives to be 90, the planet may be 3–4° hotter and barely livable.

Unless we act.

We can avoid this bleak future, and we know what we have to do—reduce emissions, offset what cannot be reduced, and adapt to new climate realities. No individual or institution can stand on the sidelines.

Our efforts to reduce greenhouse gas emissions through various mitigation measures—phasing out fossil fuels, increasing energy efficiency, adopting renewable energy sources, improving land use and agricultural practices—continue to move forward, but the pace is too slow.

We have to scale up and accelerate the transition to a low-carbon economy. At the same time, we must recognize that climate change is already happening and affecting the lives of millions of people. There are more frequent and more severe weather-related events—more droughts, more floods, more heat waves, more storms.

Ready or not, we are entering an age of adaptation. And we need to be smart about it. Adaptation is not a defeat, but rather a defense against what is already happening.

The right investments will deliver a “triple dividend” by averting future losses, spurring economic gains through innovation, and delivering social and environmental benefits to everyone, but particularly to those currently affected and most at risk.

Updated building codes can ensure infrastructure and buildings are better able to withstand extreme events. Making agriculture more climate resilient means investing more money in research and development, which in turn opens the door to innovation, growth, and healthier communities.

The IMF is stepping up its efforts to deal with climate risk. Our mission is to help our members build stronger economies and improve people’s lives through sound monetary, fiscal, and structural policies.

We consider climate change a systemic risk to the macroeconomy and one in which the IMF is deeply involved through its research and policy advice.

On the mitigation side of the equation, this means intensifying our work on carbon pricing and helping governments craft road maps as they navigate their way from brown economies dependent on carbon to green ones that strive to be carbon free.

Carbon taxes are one of the most powerful and efficient tools at their disposal—the latest IMF analysis finds that large emitting countries need to introduce a carbon tax that rises quickly to $75 a ton in 2030, consistent with limiting global warming to 2°C or less.

But carbon taxes must be implemented in a careful and growth-friendly fashion. The key is to retool the tax system in fair, creative, and efficient ways—not just add a new tax.

A good example is Sweden, where low- and middle-income households received higher transfers and tax cuts to help offset higher energy costs following the introduction of a carbon tax.

This is a path others can follow, strategically directing part of the revenues that carbon taxes generate back to low-income households that can least afford to pay. With the revenues estimated at 1–3 percent of GDP, a portion could also go to support firms and households that choose green pathways.

While we continue to work to reduce carbon emissions, the increasing frequency of more extreme weather like hurricanes, droughts, and floods is affecting people all across the world.

Countries already vulnerable to natural disasters suffer the most, not only in terms of immediate loss of life, but also in long-lasting economic effects. In some countries, total economic losses exceed 200 percent of GDP—as when Hurricane Maria struck Dominica in 2017.

Our emergency lending facilities are designed to provide speedy assistance to low-income countries hit by disasters. But the IMF also works across various fronts on the adaptation side to help countries address climate-related challenges and be able to price risk and provide incentives for investment, including in new technologies.

We support resilience-building strategies, particularly in highly vulnerable countries to help them prepare for and rebound from disasters. And we contribute to building capacity within governments through training and technical assistance to better manage disaster risks and responses.

We work with other organizations to increase the impact of our climate work. One of our most important partnerships is with the World Bank, in particular on Climate Change Policy Assessments.

Together, we take stock of countries’ mitigation and adaption plans, risk management strategies, and financing and point to gaps where those countries need investment, policy changes, or help in building up their capacity to take the necessary action.

Moving forward, we must also be open to stepping in where and when our expertise can help, and there are other areas where we will be gearing up our work. For example, we will be working more closely with central banks, which, as guardians of both financial and price stability, are now adapting regulatory frameworks and practices to address the multifaceted risks posed by climate change.

Many central banks and other regulators are seeking ways to improve climate risk disclosure and classification standards, which will help financial institutions and investors better assess their climate-related exposures—and help regulators better gauge system-wide risks.

The IMF is offering support by working with the Network of Central Banks and Supervisors for Greening the Financial System and other standard-setting bodies.

Central banks and regulators should also help banks, insurers, and nonfinancial firms assess their own exposures to climate risk and develop climate-related “stress tests.” Such tests can help identify the likely impact of a severe adverse climate-driven shock on the solvency of financial institutions and the stability of the financial system.

The IMF will help push forward efforts around climate change stress testing, including through our own assessments of countries’ financial sectors and economies. Careful calibration of stress testing for climate change will be needed, because such testing requires assessing the effects of shocks or policy actions that may have little historical precedent.

All these efforts will help ensure that more money will flow into low-carbon, climate-resilient investments. The rapid increase of green bonds is a positive trend, but much more is required to secure our future. It is that simple: we all need to intensify our efforts to work together to exchange knowledge and ideas, to formulate and implement policies, and to finance the transition to the new climate economy. Our children and grandchildren are counting on us.

This article was first published in Finance & Development, the quarterly magazine published by the International Monetary Fund. Opinions expressed in articles and other materials are those of the authors; they do not necessarily reflect IMF policy

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