IMF Managing Director Kristalina Georgieva speaks during a press briefing at the International Monetary and Financial Committee (IMFC) plenary session at the IMF and World Bank’s 2024 annual Spring Meetings in Washington, U.S., April 19, 2024.
| Photo Credit: Reuters

Shareholders of the International Monetary Fund agreed on the importance of addressing challenges faced by low-income countries, many of which are facing unsustainable debt burdens, IMF Managing Director Kristalina Georgieva said on April 19.

Multiple reports from the IMF and the World Bank this week sounded the alarm about economic developments and prospects in low-income developing countries, which are still grappling with the aftermath of the Covid-19 pandemic and other shocks.

The IMF lowered its 2024 growth forecast for low-income countries as a group to 4.7% from an estimate of 4.9% in January. In a separate report, the World Bank said half of the world’s 75 poorest countries were experiencing a widening income gap with the wealthiest economies for the first time this century in a historical reversal of development.

Ms. Georgieva said the IMF was working to reinforce its ability to support low-income countries hit hardest by recent shocks, including through a 50% quota share increase and by adding resources to its Poverty Reduction and Growth Trust.

Ms. Georgieva and Saudi Arabia’s Finance Minister Mohammed Al-Jadaan, who chairs the IMF’s steering committee, said internal reforms adopted by the IMF this week should help make the debt restructuring process speedier and smoother.

Also read: Explained | Understanding IMF bailouts

Impact of high debt levels on low-income countries

Ms. Georgieva, in a meeting of the Global Sovereign Debt Roundtable hosted by the IMF and the World Bank this week, said there was progress on setting timelines for debt restructurings and ensuring comparability of treatment for various creditors.

She said high debt levels posed a huge burden for low-income countries, including many in Sub-Saharan Africa, where countries face debt service payments of 12% on average, compared to 5% a decade ago. High interest rates in advanced economies have lured away investments, and raised the cost of borrowing.

“What is heartbreaking is that in some countries debt payments are up to 20% of revenues,” she said, adding that this meant those countries had far fewer resources to invest in education, health, infrastructure and jobs. Affected countries needed to increase their domestic revenues by raising taxes, continuing to fight inflation, paring back spending and developing local capital markets, she said.

The Bulgarian economist said it was vital for these countries to make themselves more attractive to investors, and said the IMF was engaging with countries to help them do that.

U.S. Treasury Undersecretary Jay Shambaugh raised concerns about the situation facing low-income countries last week, warning China and other emerging official creditors against free-riding by curtailing loans to low-income countries just as the IMF or multilateral development banks were pouring funds in. Almost 40 countries saw external public debt outflows in 2022, and the flows likely worsened in 2023, he said.

Kristalina Georgieva, the Managing Director and Chairman of the International Monetary Fund (IMF), arrived in the national capital on Thursday to attend the much-anticipated G20 Summit. On arrival, she received a warm welcome at the New Delhi airport and was greeted by a vibrant cultural dance performance. 

A cultural team showcased a traditional folk dance on a Sambalpuri song in order to welcome the IMF chief to the country. In return, Ms Georgieva showed her appreciation by applauding their performance and also by attempting a few dance steps herself. 

Union Minister Dharmendra Pradhan shared a video on Twitter showing Ms Georgieva shaking a leg and joining in the Sambalpuri artists. “Difficult to resist #Sambalpuri beats. MD International Monetary Fund Ms. @KGeorgieva arrives in India for #G20 summit to a #Sambalpuri song and dance welcome . #OdiaPride” he wrote in the caption. 

Watch the video below: 

Difficult to resist #Sambalpuri beats .

MD International Monetary Fund Ms. @KGeorgieva arrives in India for #G20 summit to a #Sambalpuri song and dance welcome . #OdiaPridepic.twitter.com/4tx0nmhUfK

— Dharmendra Pradhan (@dpradhanbjp) September 8, 2023

Shared just a few hours ago, the video has already accumulated more than 19,000 views and thousands of likes. “Absolutely wonderful, Proud moment for Odias,” wrote one user in the comment section. “This is the strength of our culture and music,” said another. 

“Superb display of Bhartiya Culture and Music and Dance,” wrote a third user. “How beautiful video! Though she is in great position but didn’t let Die Child in her. kudos to her. Such a warming,” added another. 

Also Read | G20 Summit: Full List Of Leaders Attending Meet, And Those Opting Out

Notably, the G20 Summit will begin in New Delhi tomorrow. The mega event will take place at the newly inaugurated Bharat Mandapam at Pragati Maidan. 

Some of the world’s most powerful and influential leaders, including US President Joe Biden, UK Prime Minister Rishi Sunak, and other heads of state, will witness discussion on issues ailing the world. The Summit will also see the participation of top administrators from international organisations such as the United Nations, the International Monetary Fund, and the World Bank.
 

File picture of International Monetary Fund Managing Director Kristalina Georgieva
| Photo Credit: Reuters

International Monetary Fund Managing Director Kristalina Georgieva will visit China from Wednesday to meet with top leaders, before travelling to Indonesia and India for ASEAN and Group of 20 summits, an IMF spokesperson said on Tuesday.

“During August 30 to September 3 the Managing Director will be visiting China to engage in bilateral discussions with China’s senior leadership team,” they said.

Ms. Georgieva will then travel to Jakarta to participate in a summit of leaders of the Association of Southeast Asian Nations (ASEAN) before attending the G20 meeting for heads of state and government in New Delhi.

Last month, the IMF raised its 2023 global growth estimates slightly given resilient economic activity in the first quarter, but warned that persistent challenges were curtailing the medium-term outlook.

The lender projects global real gross domestic product growth of 3% in 2023, up 0.2% point from its April forecast, but left its outlook for 2024 unchanged, also at 3%.

The Fund left its forecast for China unchanged, predicting the world’s second-largest economy will grow by 5.2% this year, up from a COVID-subdued 3% in 2022, before falling to 4.5% in 2024, warning that China’s recovery was underperforming and that a deeper contraction in the real estate sector remained a risk.

Ms. Georgieva will be in Jakarta from Sept. 4 to Sept. 7 and New Delhi from Sept. 8 to Sept. 10, the spokesperson added.