Good morning to all. I would like to start with a series of thanks to the IMF membership present here and represented in Washington by our excellent board for your enduring trust. We exist to serve you.
To Thailand, our gracious host, His Prime Minister, Excellency Prime Minister Anutin, Deputy Prime Minister, and Kitty, the whole team — how fitting it is to see the beautiful royal barge. It reminds us we are all in the same boat.
To colleagues at the World Bank for being our partners. AJ, our institutions pursue our duties in different ways, but we row together.
And to Governor Carvalho, this year's chair of the board of governors, your country, Paraguay, shows all the hallmarks of maturity. You make me want to retire the emerging markets label.
I also want to recognize my colleagues, the management and the staff of the IMF. Drawn from 161 countries, yet we all are sworn to serve the global public good. Please stand up. I'm so proud of you for your hard work, for your commitment to our members.
My task today is simple: provide a brief overview of the world economy shaped increasingly by AI, and a succinct report on how we at the IMF serve the membership.
Let me start from my conviction that no matter what the zigzags of history may be, the world is on an improving path, but good outcomes are not granted. We have to work hard for them. And as we do, we need to make the most of the opportunities we create and manage the risks for the sake of all people, whoever they may be, wherever they may be.
Today our boat is being lashed by the waves of technology and geopolitics. Our ability to twist and turn and maneuver is impaired by a heavy load of public debt. So far, the boat has proven to be resilient, but keeping it this way, keeping it afloat, will require considerable effort.
Technology has been with us since the beginning of time. So what is new about it? What is new is the sheer speed with which things are changing. On top of AI, an exciting but also scary thing, we also have advanced robotics, quantum computing, the hyper cloud, fintech, and medicine.
In geopolitics, an air of mistrust adds security concerns to countries' traditional focus on economic efficiency. Discontent with the world trading system in some places triggers disruption, and from Ukraine to the Gulf, we see an arc of war.
Given the sweeping changes, it is remarkable how steady the world economy has been. In October of last year, we forecast growth for this year at 3.1%. One year later, now, still 3.1%. Trade meanwhile has flown around all obstacles.
This steady growth is the net result of two big opposing forces: an energy shock hurting growth and an AI boom lifting it. But digging deeper, we see significant divergence. War-hit economies have suffered large growth downgrades, while economies in the AI value chain — US, China, India and others, mostly in Asia — enjoy upgrades.
And too many countries carry too much debt. Rich countries are the worst offenders. But debt levels are rising in emerging markets, too. Low-income countries tend to have lower public debt-to-GDP ratios, but still high and rising interest burdens. Coming on top of declining official aid, this crowds out development spending.
The macroeconomic consequences of these crosscurrents are clear. First, the energy supply shock pushes inflation up and growth down. Shipping remains in peril. Refinery and natural gas shortfalls are biting. Northern countries need to rebuild their fuel reserves as winter is coming.
Second, high debts and deficits hurt countries' ability to buffer shocks and can also be inflationary. And while growth helps, no plausible growth pickup on its own can reverse rising debt paths fast enough without fiscal effort.
Third, yes, the rapid arrival of AI pushes growth up, but it too fuels inflation in the short run. AI generates vast infrastructure needs, increasingly funded by debt. Certainly productivity gains are coming and more are expected, but how much and how fast is yet to be seen.
In addition, this year's super El Niño also adds to inflationary pressures, impacting food prices, which hurts the poor the most, and causing other disruptions.
One outcome of all this is that the bond markets are talking to us. After significant increases this year, US, German, and Japanese 10-year sovereign yields recently reached their highest levels since 2002, 2009, and 1996.
These rising benchmark rates lift yields in both emerging markets and advanced economies, including in the Euro area. Higher-debt countries see larger increases, as is to be expected. Importantly though, and that's the good news, market dynamics remain orderly.
With multiple factors pushing inflation upward and with memories of the recent high inflation still fresh, central banks should be laser-focused on price stability. We at the IMF support the recent tightening stance and firm language from the US Federal Reserve, from the ECB, and the Bank of Japan.
And let's remember, rate hikes today are better than falling behind the curve and having to double down with larger rate increases tomorrow. Nonetheless, tighter monetary policy does lift government funding costs, and more rapidly if short-term public debt is large.
So where are we? The inescapable bottom line is that preserving stability requires fiscal consolidation in most high-debt countries. Governments need to develop credible medium-term fiscal plans supported by upfront measures.
In some cases, our call for fiscal restraint is particularly relevant for systemically significant advanced economies with high debt and deficit — not only to benefit them, but also so they can help others, given that they can generate significant spillovers to the rest of the world.
We know consolidation is hard everywhere and always. Policymakers need to explain why it is necessary. They need to formulate plans that limit costs to future growth. They need to protect the most vulnerable in society. And they need to complement fiscal reforms with structural policies to lift potential growth.
Now, given the speed at which AI moves, key among those structural policies must be steps to ensure AI preparedness. This means different things in different countries, depending on whether they are AI producers, suppliers, or adopters.
But let's remember, simple AI accessible via a smartphone could prove very democratic, and the World Bank told us how in their development report. As the science fiction writer William Gibson says, the future is already here. It's just not evenly distributed. Our task must be to bring this future to everybody, everywhere.
Equally, all countries must protect themselves from the substantial risks of AI, stretching from youth joblessness to a hollowing out of the tax base to financial instability. Perhaps the deepest worry is cyber risk, which involves fears of financial turmoil, infrastructure disruptions, or worse.
We see the number of cyber attacks growing exponentially, while the time between discovering and exploiting vulnerabilities is collapsing from months to hours and soon to minutes. We are in a race to make sure that the good guys remain a step ahead of the bad guys.
A borderless global AI system may only be as strong as its weakest link. Ensuring supervisors everywhere can work to enhance cyber resilience becomes a matter of the collective good. In this and in other areas, the need of the hour is for urgent and practical international cooperation.
Which brings me to what we at the IMF do through our capacity development work and our Financial Sector Assessment Program. We help countries strengthen their financial systems, including to protect against the global cybersecurity challenge. Each year we deliver about 300 technical assistance and training programs in financial supervision and around five FSAPs.
And this year we concluded our latest five-year FSAP review, which seeks to ensure that we remain at the cutting edge.
Today I'm pleased to report that for exactly the same reason as we heard from the chair, we have completed a comprehensive review of our surveillance, of our lending conditionality, and debt sustainability assessment methodology for low-income countries. The Fund, your Fund, never rests.
Fundamentally, our macroeconomic work is about addressing domestic and global imbalances — fiscal, as I have already discussed, but also imbalances between private savings, investment, and trade within and between countries, where we are deepening our assessment methodology and advice.
We are urging our members to take this challenge very seriously. The US needs to save more. China needs to consume more. And Europe needs to invest more. There is plenty of policy homework for all: fiscal consolidation in the US, less state involvement in economic decisions and better social safety nets in China, and deeper integration in the EU.
In the near term, however, trends are going in the wrong direction, with the US still over-reliant on domestic demand and China on net exports. But this is a medium-term endeavor. The purpose is to change this trend.
And we know along the way, when we look at our membership, we have strong economies, but we also have economies that stumble. And when they stumble, we're there to catch them. Currently, our credit outstanding plus undrawn commitments stands at $240 billion.
What does it mean? It means that we still have unused lending capacity that is three times that big. In other words, if a crisis was to show up, we are there. Our concessional lending at $36 billion is around four times its historic average.
And on that note, I want to turn to you, to our membership, with an important request. We need to have funding for our most vulnerable, poorest members. We have agreed that putting the Poverty Reduction and Growth Trust, our main concessional lending vehicle, on a path to self-sustainability requires broad approval for distributions from all, and that is not yet quite achieved.
So far, 39 countries have provided assurances totaling about 48%. I welcome the efforts of EU countries to find the path to provide assurances. That would take us up to 74%, and we still have some way to go to 90. For the sake of our most vulnerable members, let's get this done.
And in the meantime, I want to give my heartfelt thanks to those who have already committed their support to the PRGT. I also want to thank those who support our capacity development efforts. During the annual meetings, we have secured more than 100 million in new capacity development commitments. That is about one quarter of our annual spending.
We have two more days in the annual meetings. Those of you who may say we also want to join and give support, you know where to find me. So let me now conclude.
I'm standing here in this beautiful country. I cannot think of a better way to finish but by quoting His Majesty, the late King Bhumibol, whose words remind us that benefits and positive outcomes do not arise on their own. Rather, they must be gradually cultivated, accumulated, and strengthened over time.
This is the essence of our work: relentless pursuit of betterment in the lives of people. It takes time. It takes perseverance. And it is best done when we all work together. All our 191 members united for a common goal. Kob khun krab, Thailand. Thank you.
Thank you, Ms. Georgieva. I would now like to invite the president of the World Bank Group, Mr. Banga, to deliver his annual address.
Good morning, and Kristalina, thank you for that. As you probably have known, she and I are brother and sister from different mothers. So while she was talking about boats, I was working actively in my speech to take out any mention of boats so that I would not be repeating her jokes. So that was important.
But let me, on a serious note, thank the Prime Minister of Thailand for giving us the privilege of opening this plenary, and to the Deputy Prime Minister and your team and the central bank governor. You know, you have proven why Thai culture is so important. You've made 20,000 people think this is their home. That is remarkable. Thank you.
And of course to our chair, thank you for who you are. Thank you for your leadership. It's actually a real pleasure that you've been able to help us, and it's been a pleasure to work with you and the government of Paraguay.
I want to thank all of you for being here — all our members, all our friends, all our colleagues, my pals in the bank, in the IMF. Without you, none of us work, none of us can do anything. Your encouragement is what drives us. And so that's been very important to me. I've been in this job since 2023.
In the months before I joined the World Bank Group, three truths emerged very clearly from all my conversations with shareholders, with clients, with private sector leaders, with philanthropies, and with others. The challenges were great, resources were limited, and the World Bank Group needed to sort of turn our boat to face the wind.
Three years later, unfortunately, the wind has not eased, as Kristalina spoke to. Conflicts are persisting, fiscal space is tighter, debt burdens have risen, and the cost of essentials from energy to fertilizer remain high, along with the uncertainty of supply. Meanwhile, a demographic transition is unfolding.
Over the next 10 to 15 years, 1.2 billion young people will arrive at a job market that in the developing world is projected to offer only about 400 million jobs. That generation will shape the next century. The choices we make today will help determine how that generation shapes the next century.
Those are the twin challenges we've been working to address: making scarce resources go further while helping countries create jobs at scale. The thing is, you have to address them together. And over the past three years, I have used these annual meetings to lay out the work that we've all been undertaking together, the changes we were making, the ambition behind those changes.
So this year I want to focus on our progress and where that is taking all of us. The future of development will depend on bringing public finance, private investment, philanthropy, and technology together around what each country needs. That partnership, the legs of the stool, should mix. They should be where the needs and risks are greatest.
Public and concessional finance will remain essential. But as countries grow stronger, private investment and access to markets should play a larger role. And to be clear, success arrives when we are no longer needed by a country. We have to make ourselves extinct. That is success.
Thirty-five countries have moved from IDA to IBRD. Twenty-three are now IDA donors themselves. That is exactly what we want. And our strategy is built around making that progress possible.
It began with changing the World Bank Group itself. We cut project preparation from 19 months to nine. We replaced 153 scorecard measures with 22 focused on impact. We've increased pay-for-results financing from one-third of our financing to half. We brought our public and private sector teams together around country-led and country-driven strategies.
And we have re-engineered our balance sheet. We've created more than 100 billion in additional IBRD lending capacity over the next decade. We're also making it easier for all of us in the MDB community to work together so that one plus one can be three.
The number of projects on our digital co-financing platform has tripled in two years to about 250 projects now seeking more than 138 billion in financing. Interestingly, a number of projects in the platform have nothing to do with the World Bank. That's the power of partnership.
We have sort of cut duplication by creating full mutual alliance frameworks with the Asian Development Bank, the Inter-American Development Bank, and the European Bank for Reconstruction and Development. And we've got more to come, and the idea is to expand that model.
So taken together, what's the point of all these? These changes give us greater capacity as a community. Our jobs strategy, however, gives that capacity a direction. The jobs council that we have been drawing upon drew on its experience across countries and sectors to identify policies and programs that create more and better jobs.
The strategy that emerged rests on three pillars. The first is physical and human infrastructure. Employers need electricity, water, transport, digital connections. People need health, education, and the appropriate skills for their future. Last year, we committed 40 billion, nearly one-third of our financing, to these foundations.
Second, it needs regulatory and policy certainty. Businesses of every size depend on strong institutions, good governance, clear rules, clear odds, from simpler permits to predictable land laws. Last year, 30% of our public sector financing supported policy and institutional reform.
Third, scale. Even with strong foundations and clear rules, some risks still hold investment back. The private sector investment lab helped us focus on those barriers, from currency risk to access to finance, and strengthen the tools to address them: guarantees, equity, local currency financing. That's how we bring more private capital into development.
And the results are now beginning to show. In fiscal year '22, the year before this plan began, we mobilized roughly $35 billion in private capital. Last year, 112 billion, a three-fold increase. Alongside our own financing, total financing exceeded 230 billion.
Those gains are being felt across the spectrum. Mobilization nearly tripled in lower-middle-income countries, quadrupled in upper-middle-income countries, and more than doubled across the continent of Africa.
But our challenge is that in low-income countries, fragile, conflict, violence-affected countries where attracting commercial capital remains the hardest, mobilization was flat.
The path to the poorest and most fragile economies runs through their small businesses. That's often where growing, where larger companies have yet to take root. And our new MSME strategy, micro, small and medium enterprise strategy, aims to reach exactly where opportunity is hardest to come by.
Meanwhile, participation is broadening too. Last year, the capital we mobilized was from investors in 110 countries. The US, the UK, India led the way. But guess what? Investors came from Romania and Chile and Poland and Brazil. More countries are attracting investment. More are supplying it.
Across it all, nearly 55% of our financing and the private capital we mobilized went to the five sectors we care about: infrastructure and energy, agribusiness, health, tourism, and value-added manufacturing. These sectors are the ones that raise productivity and create locally relevant jobs in those economies in the developing world.
And total World Bank Group climate co-benefits reached 96 billion: 48 from private capital and 48 from our own balance sheet. 96 billion from one institution in one year.
But financing is just the beginning. The real value is bringing together that capacity and combining it with each country to make sure that we go after what they are trying to achieve. That's why country strategies matter. That's why country compacts matter. That's why country partnership frameworks matter.
Roadmaps that build around a country's ambitions, a country's needs, the results that we are trying to achieve together, and the investments and the reforms that are required to get there. That roadmap is bespoke to each country, but the discipline is consistent across the World Bank Group.
We have to show up with all these emerging countries and the private sector capabilities right from the start. We use IDA and our balance sheet where public and concessional resources are needed. That is mission-critical. We align with philanthropy and operational partners. We mobilize private capital where markets can support it, and technology is the multiplier, the juice that amplifies that work.
Big AI requires computing power, energy, data, specialized skills, and capital that put frontier models beyond many developing countries' immediate reach. But practical or small AI can help a farmer improve yields, a teacher tailor instruction, a health worker make better-informed decisions, an entrepreneur reach new customers.
Or as the Deputy Prime Minister showed us, merchants in Bangkok and Thailand get access to credit and better inventory management. That is AI that works for people. So we are helping countries build the electricity, connectivity, device access, safeguards, but most importantly the tools and applications to put these things to work. AI that works for people.
Skills are part of the package, connecting education and training more closely to the jobs and industries that countries are building. But so are small businesses, and I said our MSME strategy is designed to make these firms more visible, more connected, more enabled, and better funded.
The idea is to use digital records, digital exhaust, to improve access to finance, to link smaller businesses to larger buyers and markets, and simplify the rules that allow them to grow. Critically important in fragile and conflict-affected settings where conditions do not yet support larger companies.
It is these very small businesses who play an outsized role in creating jobs and laying the foundations for stability and future growth. Embedded across everything we do is what? Building resilient infrastructure and, most importantly, stronger institutions so that progress can last. That is what we refer to at the bank as smart development.
And our method is producing results. Let's start with energy through Mission 300. Our ambition with the African Development Bank and a number of other partners is to bring electricity to 300 million people in Africa by 2030. So far, close to 60 million people have gained access, and the pace has accelerated. We connected 12 million in fiscal year '24. That rose to 18 in '25 and 29 last year.
But access was only part of the challenge. Homes, mines, factories, farms, growing cities — what do they need? Reliable, affordable base-load power. It's not enough to put one light and one fan on a home. We have to give them productive electricity.
Our approach is balanced by design: a full mix of renewables, hydro, gas where appropriate, nuclear where it makes sense, transmission grids, storage, the whole thing. That includes supporting nuclear retrofits with the help of the IAEA, the first such work in 50 years for the bank.
On water, our ambition with partners is to improve water security for up to 1 billion people by 2030. The World Bank Group will contribute 400 million out of that billion. Twenty country compacts give us a path to reach 150 million people with clean water already. Twenty more compacts are on the horizon.
In agriculture, private, philanthropic, and operational partners are working to help 300 million smallholder farmers move from subsistence to surplus by 2030. We've committed to 200 million of that. We already built a pipeline to support 82 million farmers in AgriConnect's first full year.
Now we're doing the same real-scale work to reach the rest of the 180 million to meet our commitment of 200 million. And through HealthWorks, supported by the Japanese government, our ambition is to reach 1.5 billion people with quality, affordable healthcare by 2030. As of now, we're already at 600 million, and that is part of the progress we need to show.
The same model is showing up in newer areas. In critical minerals, we plan to multiply our business five times in the next five years. This week, we launched our first country compacts with other MDB partners to build local industries and keep more jobs and value at home in the minerals business. We've identified 20 countries who we could partner with on this work.
In the economic corridors, we've launched 52 new projects last year, up from 23 years earlier. With partners like the European Commission's Global Gateway, with the US's DFC, and very interestingly, Italy's own Mattei Plan, we are bringing infrastructure and investment together.
The infrastructure connects places. The opportunity grows along the way. So take Lobito Corridor, a route that principally is for minerals, is increasingly carrying farmers' crops to markets. What does that do? It helps towns and cities grow along the way. That's what corridors do.
Different sectors, different countries, different solutions. Remember, bespoke plans, same objective, same discipline: advance development, create jobs for young people, give them hope, give them dignity.
The next phase is execution at scale. That means meeting private sector clients where they invest and where they make decisions. We're expanding our presence in New York, in Frankfurt, in Milan, in Tokyo. Why? Because we have to originate opportunities where those clients are, solve problems faster, build stronger pipelines.
But stronger pipelines are just part of the answer. Development finance has always faced a very basic constraint: a dollar can only be in one place at one time. Finance a power project, that capital is fixed in that place for decades. It's unavailable for the next water system. It's unavailable for the next rail corridor. It's unavailable for anything else the clinic or a hospital that that country needs.
Meanwhile, pension funds, insurers, and sovereign wealth funds manage enormous pools of long-term capital. They're looking for long-term investments. That is their need to balance their assets and liabilities. We are doing the matchmaking. We are making the introduction.
Six multilateral development banks are creating common ways to assess, document, package, and transfer investments so that a project we help finance today can be held by another investor tomorrow, freeing our capital for the next one. So it's not locked up for 30 years. Repeated across institutions, repeated across markets.
Now we will begin to create something much larger, much bigger: an emerging market development asset class. That is our ambition. We get this right over the next few years, the size of our balance sheet no longer will define the scale of our ambition. We will no longer be just waiting for that money to come our way. We will bend the curve of development forever.
So let me end where this institution began. Back in 1944, when the world was still at war, delegates from 44 countries gathered in the mountains of New Hampshire. They had every reason to turn inward. Instead, what did they do? They made a wager, a bet that rebuilding one nation could strengthen others and that recovery was a shared responsibility.
They did not build a monument to charity. They built a bank and a fund. They understood something we must never forget: prosperity is not a prize one nation wins from another. It is a fire that warms every house within its reach.
As countries and their needs change, this institution has changed with them. We've developed new ways to finance development and to support private enterprise. We are building knowledge over decades of work. Our people, some of whom are sitting here, but so many others are in countries — our people carry that inheritance forward.
Their expertise turns lessons from one country into possibilities for another. It's their commitment that turns these possibilities into progress. So before I go further, take a minute to acknowledge them. They are the true strength of our institution, and I want to join — just please join me in applauding our people.
Today the challenge arrives as arithmetic: a gap of roughly 800 million jobs. Behind that number is a young woman with a degree and no employer. A young man with a trade and no electricity. A generation asking, 'What are these guys doing? Is there a place for me?'
A job is not a statistic. A job is dignity. It is the difference between a young person who can build a future and a young person who is merely awaiting one. You leave that potential unrealized, and the consequences will cross borders. But you give it opportunity, give it the fire that I was referring to, and guess what? Those benefits will cross borders as well.
That is why development is not charity. It is an investment in our collective future. This institution is rising to that challenge — not to recreate the development model of the last generation, but to build one equal to the expectations of the next one. A model that evolves as countries do.
Public money where markets cannot yet reach, but private capital where it can create jobs at scale. Philanthropy to take early risks and unlock new ideas. And technology to be the force multiplier to make every dollar go further. And a World Bank Group that brings it together with its talented people, but around what each country needs, built at the country level.
That's the future of development we are working toward. The jobs gap is a projection. It does not have to be our future. We have begun to show what this model can deliver. Now what we have to do is give it the scale, the place the next generation demand. That future is ours to build. And thank you for being on the journey with me.
Thank you, Mr. Banga. Before adjourning this session, I propose that we resolve to record our appreciation to the host of the 2026 Bangkok meetings and to convey that the Board of Governors of the International Monetary Fund and the World Bank Group express their sincere appreciation to the government and to the people of Thailand for the gracious and warm hospitality during these annual meetings.
That they express particular appreciation to the governors and alternate governors for Thailand and to the associates for the many contributions they made toward ensuring the success of the 2026 annual meetings.
Without objection, we will record our declaration of appreciation. I would also like to take this opportunity to thank the governors of the International Monetary Fund and World Bank Group for the honor to serve as chair of this joint session, and I thank you for your support and cooperation.
Allow me to express my deep appreciation to Ms. Georgieva and Mr. Banga for their leadership of our two institutions. I also recognize the commitment of the staff of the Fund and the World Bank Group for carrying out the vital work of these institutions.
I would like to thank Mr. Rhoda and Ms. Kumar Kapoor, as well as the staff of the secretariats of both institutions, for the successful organization of these meetings. I would also like to thank the chairs and vice chairs, the governors of Cote d'Ivoire, Maldives, and Luxembourg.
I wish to congratulate the governor for Pakistan, who has been selected to chair for the coming year.
I wish all the governors and delegates a fruitful and productive meeting for the period, and a safe journey home after the completion of our work. I look forward to seeing you next year in Washington, D.C. I hereby adjourn this meeting of the 2026 annual meetings of the boards of governors of the IMF, IBRD, IDA, IFC, and MIGA.
A very good morning to everybody in the audience and those who may be watching in the overflow room. There is a great deal of interest in this conversation because of who it is with. I am delighted to introduce Chairman Kevin Warsh.
For those of you who may not be fully familiar with his incredible professional career, let me say a couple of words. Chairman Warsh was a keen scholar of policymaking throughout his entire life. He spent his career at this intersection of monetary policy, finance, and economic policymaking.
And he has been able to look at issues that concern not only the financial system but the lives of people from multiple perspectives: as an academic, in the financial markets, and in the public sector.
So where did he come from? Just before he took over the chairmanship of the Federal Reserve, he was Shepard Family Distinguished Visiting Fellow in Economics at the Hoover Institution, a lecturer at the Stanford Graduate School of Business, and a partner in Dukas Family Office.
He came to those from working at Morgan Stanley. He advised President George W. Bush on capital markets and banking issues. But my favorite part of Kevin's career is when he first was at the Federal Reserve — at what time? In the most challenging and taxing time. He was there during the global financial crisis, and he was there as the youngest ever governor at the age of 35. And now he's now 36.
He has very deep, impressively deep understanding of financial markets. Instrumental in navigating one of the most complicated periods in recent history, and sat at the table with those who had made at that time critical decisions — the most consequential decisions for many in their lifetimes. So he saw crisis from the inside. I do not wish you ever to repeat this experience.
And as we all know, in May this year he became chairman of the Federal Reserve. Great choice. I can say with admiration that you bring, of course, a lot of experience, but one quality that you bring that I rarely see is you have profoundly thoughtful responses to questions, and you never shy away from listening to opinions that may be different from yours.
Now, I can say, when Kevin agreed to be here, I thought, okay, so let me see how we can get the conversation that is about the broad transformational trends and dig deep into your thinking.
I want to start from where the world is today. We are here at the annual meetings. We talk about a resilient world economy, but also about the fragility of this resilience, the divergence across countries. We discuss what are the sources of resilience, could they continue, would they last, what it would take for them to last.
And I thought that it would be a great start for today to hear from you. How do you see the world economy? How do you see that resilience on which we have been relying? Would it last? What is your advice to policymakers? How do they orient themselves in a time of higher uncertainty?
So first of all, thank you very much, Kristalina. Full disclosure: Kristalina and I are old friends. So those questions sounded harder, but there's some softballs coming, I presume.
So the only part of that biography that Kristalina read that I will differ with is she said her favorite part of my resume is the global financial crisis. That is not my favorite part. And when I come back to meetings of the IMF, come back to meetings of the G20, I'm obviously incredibly honored to be in this post. This is a hugely consequential time.
But when I walk into the IMF, when I come to these meetings, I will say I still have a little bit of scar tissue from the deepest, darkest days of the global financial crisis. I might be over-scarred from that period, but better over-scarred than under-scarred, I presume.
So we can go in any direction you want. I think you were asking about the state of the global economy. So what I've tried to do, which might be a little bit of a change for policymakers, is what I try to do is look outside the window.
In our business, in economics, in policymaking circles, we can focus on the past, on the history, and look at data which we think of sometimes as contemporaneous data, but it's really lag data — it's about what happened. We can also focus a lot of our time and attention on the future. We certainly want to know what 2027 and '28 are about, but none of us are perfect forecasters.
So what I try to do in thinking about what's going on is I try to look out the window as clearly as I can. At the Federal Reserve, where we do that about eight times a year when we sit down for these FOMC meetings. We did that, I don't know, a month or so ago at the September meeting, and we came to a judgment: what are we seeing in the global economy as it affects the US?
I would say broadly over the month or so that's transpired since then, the world has broadly conformed to our expectations. We'll be meeting a couple more times this year, and that will be the crystallizing moment at which we're going to look out the window. What do we see? What's happening to output? What's happening to employment? What's happening to inflation?
And in those inter-meeting periods, especially occasions like this when Kristalina and I get to sit down without the cameras and the microphones, and I get to sit down with my G20 colleagues, I'm doing at least as much listening as I am talking. Obviously, the Federal Reserve and our policies spill over to the rest of the world, but their policies spill back to us, too.
So I made judgments about a month ago, make some judgments at the October meeting and the December meeting, but broadly, let me just step back and give you now slightly dated views which probably still hold.
One is, 20 years ago at meetings like this, we talked about secular stagnation. Boy, that seems — I don't know if it was as inaccurate then as it seems now — but right now we have structural growth. We have an investment surge.
It's not hitting every country at the same rate, but in the United States, we're having a massive investment surge. And it makes me think, Kristalina, the idea of secular stagnation suggested that that was somehow inevitable. There was nothing policymakers like you and me could do about it.
If we learned anything since my last time sitting at a post like this and now, there's a lot we can do about it. Policy matters. The investment surge isn't by accident. It's because of the consequence of good policy — both macroeconomic policy, but also, as you've heard about in the last week or two from new Nobel Prize winners, the micro foundations.
And decent macro policy and strong micro foundations can lead to an investment surge. It's probably the most important thing that's happening in the global economy on the upside.
But to be balanced, as we central bankers have to be, you know, I came out of meetings here yesterday and today, and it's hard to be in a discussion with central bankers and not compare notes and hear the same thing about the surge in prices. It obviously affects each of us differently.
At the Federal Reserve, we made very clear that we would deliver price stability, and we removed a dose of accommodation about a month ago. I don't prejudge meetings. I don't believe in saying now what I might do at the meetings that we have in the balance of this year, but that was the situation.
Disappointed half of the audience or more?
They can all turn it off. It's a new chapter at the Fed, and we're not in that business anymore, but we can go in any direction you'd like.
Well, this is a very good direction. So we talk about the — you rightly say you look out of the window. What we see is an economy that in some places is booming. It is being dragged upward mostly by enthusiasm about AI, but then you go into other places and other factors, especially the impact of war, it's dragging economies down.
One thing that is happening everywhere, whether your economy is going up or it's going down, is the stubborn inflation, price pressures that are coming from everywhere. And one of the sources, of course, is the energy shock in the Middle East and the energy shock from war. But one of the sources is this investment enthusiasm about AI.
So my question is: from a monetary policy perspective, how should we think about the impact of AI in the short term, in the long term? Is there anything that we are paying too little attention to, should be paying more attention to today?
Yeah. So it's a great question. A couple of things. First, Kristalina, you pronounce it AI. In the US, we now pronounce it EI, just so you know. So it's probably...
Can I say potato, potato?
That's right. It was just a — I don't know how that's going to translate for the countries around the world with teams of folks.
I'd say the advent of this new technology is probably the most consequential change to the US and the global economy in my lifetime to this point. So I take it seriously, but as a central banker, also soberly, responsibly.
I'd say it's going to do several things. First, it's obviously hitting the demand side of the economy before it's going to hit the supply side of the economy. See, if you're a central banker and you're in the business of trying to ensure stable prices and full employment, you've got to recognize this as a shock. But it's a positive supply shock in the medium term. I do fundamentally believe that.
But on the path to that positive supply shock, we're seeing increases in aggregate demand. That just is what it is. But I think of this shock differently than those other shocks you talked about — shocks of war and military conflict and the rest. This one, there really is, I think, a huge benefit to the global economy, to the US economy over the horizon.
So that's one comment. Second, it's a big deal for central banks because we're in the business of trying to, in some ways, distill noisy data all over the world. We get some of that from official statistics in the US, from the Bureau of Labor Statistics, the Bureau of Economic Analysis. We torture data with old-fashioned models to try to find out what's underlying inflation trends.
Not so long from now, it won't be torture. We will have access at the fingertips of central banks to all the information in the world, and we'll be able to use new analytical tools to distill that data.
So when we get new information, we're going to have a lot more confidence in what it tells us as we're looking outside the window and saying, is that real or is that lagged and noisy data subject to mismeasurement? So I think it's going to fundamentally change the conduct of monetary policy, as a second point.
Third, it's going to change the real economy. We don't know in the next 12 or 18 months its effect on employment. But if you believe, like I believe, which is it will make economies and countries that put it to good use more productive, that it's going to make it so that we will have more wealth, then that has to be a very good thing.
But the path from where we are to there is likely to be a very bumpy one. Bumpy in our understanding of the technology. Bumpy because we really don't know what the market structure is going to be of these new technologies. Who's going to get to make the money? What are the consequences for those that bet that they were going to make money, but the market structure doesn't allow it?
So I want you to hear from me: optimism, but optimism leavened by the seriousness of purpose to the day jobs that you and I have. And I think it's an exciting development and it's an innovation that I think a decade from now they'll look back on and they'll say this was hugely consequential. So our job as policymakers is to take it with that same kind of focus.
I'll just say one more thing on big, hard questions that don't matter much to the current policy conjuncture. My view is we at the central bank need to invest in the next policy conjuncture.
So among the external task forces that I initiated about four or five months ago is one on productivity and jobs. We're going to have our first field hearing of a task force on November 16th in the Bay Area where we're going to wrestle with these issues.
I'm pretty sure I've got the right questions, not sure I have the right answers. And so we've got a group of outside experts both on the task force and people in the broader community to help us engage on that. And hopefully there'll be fruits of that not just for us in the US, but these efforts that we're doing and investigating at the Fed, these are global public goods.
And might the IMF, might other G20 central banks learn, decide to adopt some of these things their own? That's the hope and expectation. The better they do, the better we do.
Very much look forward to that. So to avoid the linguistic controversy, let's call it the NHI, the non-human intellect.
So if we look at that development that is incredibly rapid, we do have to think about the impact on inflation, short and long term. We do have to think about impact on financial stability. And as you said, there is the excitement of what it may mean for productivity.
On this triangle of inflation, possibly disinflation in the future, the impact on financial stability risk, and the upside on productivity — which one are you getting your task forces to concentrate most on? What is, in your view, the one issue that dominates monetary policymakers?
Yeah. So first, here's my working proposition about task forces, because I've been on task forces like you have before we were in these jobs. You want to ask them the questions. And to be full disclosure, I check in...
with each of my five task forces periodically. But you also want to let them be themselves. The idea of the task force on productivity and jobs, on data collection, on inflation is to let them produce new intellectual capital and to drop that on the Federal Open Market Committee to share their views with the broader audience and see whether that catalyzes new thinking. Otherwise, you and I and our peers in central banking, we could just push the same ideas around. The idea is to really let them do it.
There are tail risks associated with all shocks. I'm not going to try to bite off one tail and say it's all to the good. What I'd say is the US is investing through the private sector capital in a range of new technologies, in a range of new companies with bets on different parts of the market structure. In my business, we don't have to figure out who's right or wrong. That's what financial markets are for doing. But we do want to step back and ask ourselves the question: if various scenarios were to happen, what are the implications for our remit? A remit, as you know, we talk about as stable prices and full employment. But inching into that again, you know, with the history of my visits to the IMF 20 years ago, we also want to think about financial stability risks. And the way I think about it might be a little bit different.
I don't think the central bank or the international policymaker said that we should be in the business of stopping variance away from some modal outcome. What we got to want to ask ourselves though, are there negative tailside risks that we can do something about? And we have to be pretty humble about that question. I've given the task force every ability to sort of ask themselves, what are the upsides? What are the downsides? And what are the implications for us? The same way I'm not going to prejudge FOMC meetings, I'm going to try not to prejudge where they come up.
Task forces. Yes. Very good. By the way, Kevin says, "We both have been on task forces." He was leading one that resulted in the Queen of England reporting the results to the parliament. So, it's a very special chairmanship you offer. Now, I count it. Kevin, today is your 148th day on the job. And actually there is a little risk in my calculation because it depends whether you calculate in Washington or here in Bangkok. But we are about there. So what is that you have reached a conclusion now that you didn't have on the first day? How do you see moving into the job further?
Yeah. So it's a fair question. I'm probably not best at introspection, so full disclosure on that. I'll begin by saying I'm sure glad I was there before. If I hadn't been at the Federal Reserve for five and a half years, especially during a period of some consequence, I think I'd probably be a bit more hesitant to introduce new ideas, to practice new ideas inside the Federal Reserve of 23,000 people to sort of probe the question of can we create a new chapter at the Federal Reserve making the best of the Fed's traditions but recognizing this is a brand new world. So first I would say five and a half years of time served I think has served me well. You know it's said that sometimes someone that when they join an organization they want to bring the fresh perspectives of an outsider. I will balance that by saying you also have to have some of the knowledge of an insider. I'm trying to think of myself as being on the edge of the inside.
So what are my lessons from 148 days? First, there's an incredible depth of talent at the Federal Reserve. I must say a little piece of me worried. I've been gone for 15 years. I wondered whether all the talent might have left at some point in those 15 years. There's an amazing amount of talent that's still there. And the lucky thing for me is when I was young, they were young, too. And they're incredibly dedicated to the mission we have. Yeah. They're as proud as I am to say I work at the Federal Reserve.
And so part of all these jobs is getting policy right, but one key way to get policy right is to make sure the culture is right. And if I go deep in the organization, I see brilliant people practicing new ideas, challenging each other. Maybe for people that are on the outside of the Fed, it sounds all like we're all reading from the same script, but just beneath the surface, there's something really, really impressive. And so that's a takeaway. I would say I'm surprised on the upside how much talent is there.
Now, our job in running these organizations is how do we tap into that? How do we get the benefit of what they know, but rethink, reorganize, how to bring that to bear? So that's one. Two, I'd say where I would say I've failed in my first 148 days is mostly because of all of you and the people that are on the end of this camera. They're all focused on monetary policy. Well, 75% of the people at the Federal Reserve, they don't work directly on monetary policy. We're in a lot of businesses. Businesses given to us by Congress, supervision and regulation, payment systems, consumer and community affairs. I could go on and on.
I haven't been as good as I need to be to make sure they know I care about their issues every bit as much as I care about the conduct of monetary policy. So I've probably been drawn a little bit maybe because of this moment, but the head of the Fed needs to be the head of all parts of the Fed. And I say that not without enthusiasm. I say it because ultimately what matters to the central bank, what's most important about what we do, it's not the printing press. It's a powerful tool. It's neat. If you guys had one, you'd love it. But the power really comes from our institutional credibility. And that was bestowed on me by the great chairmen that came before me.
Yep. And the only way that we're successful in getting policy right is if we burnish that institutional credibility. And so whatever any part of the Federal Reserve does, if they slip up, if they stumble on supervision or on payments, that reflects on our institutional credibility. So my next hundred days, I'm going to try to give equal focus to those other parts of the business because they matter, too. And you know when you take over a position like this, you need to lead all of it and you need to love the institution enough across everything they do to go back and ask first principles instead of will we do it this way because that's how we've always done it. That's not good enough.
Not good enough indeed in a rapidly changing world. So you mentioned that there were the leaders before you. You're the 17th chairman of the Federal Reserve. When you look back, what is it that mostly inspired you of the leadership of the past? I don't know whether you have gotten that far to think of what you want to leave behind, but what do you think the 17th chairman of the Federal Reserve may be remembered for?
Boy, it's been 148 days. I'm not in the legacy business. I'm in the business of trying to get policy right. And so that may be what you're remembered for, Kevin. Yeah. I mean, I don't think I took over at the easiest moment. I think I took over at a time of consequence. So I must say I don't think about it like that, but I'll say a word about my predecessors.
I'm lucky enough to have known or worked with my five immediate predecessors. That's very impressive. I remember when I was summoned as a young nominee to be a governor at the Fed, one of the ranking members of the Senate Banking Committee looked at me, thought I looked a little young, I suspect, for the job, and he wasn't so sure that I was right. And he sent me to a meeting with Paul Volcker.
And you know, I was 35 at the time. I remember going in there, still a big strapping guy. I called him Mr. Chairman. If it were these days, I would have brought one of these cell phones and done a selfie. I probably brought an autograph book showing that I was still a child. But I learned from each of them. I would say if I think back of the Volcker era, the Greenspan era, the Bernanke era, they met the moment of their times. They were each confronted with challenges that their predecessors weren't confronted with and they managed to take a great institution and match the moment.
I hope I'm not brought to those sorts of challenges. I hope the next 3 years and 8 months or so is just nothing but benign. But they were there.
We will all pray for that, Kevin. But they did that and I would say those three, they love the institution enough to be unafraid to challenge it, to change it, to think about a new chapter. That isn't somehow bad to think about reforms. They made reforms that were necessary to conquer that moment. And I would say this about each of them. They were all three very different people. But what they found in the institution was an enormous amount of talent which is what I found. But they found themselves in a policy conjuncture that was in no textbook.
And they figured out how to do it. It doesn't mean that any of them had perfect records. I don't think any of them would say that. But they figured out how to make policy about as good as they could. And that's an incredible, incredible legacy. So I've learned from them, but the idea that the 17th chairman of the Federal Reserve is going to act like the 13th, 14th, or 15th, there's no status quo ante to return to.
The world in my view is changing faster than at any point in my adult life. Agree. And so we need to be on the front of our feet to ask ourselves, what's this mean for us? And so I can be inspired by them. I can be proud that they left the institution with more institutional credibility, which makes our job easier.
But beyond that, I'm not spending a lot of time looking back. I'm spending a lot of time looking out the window and saying what's really going on. You know, you mentioned a speech I gave a little while ago in Jackson Hole. One of the themes of that is our first job is to interrogate reality. What's really happening? I think it's Orwell who said the hardest thing to know is what's right in front of you.
At least for me, it's hard to know exactly what's going on out there. That's why coming to meetings like this to hear other people's perspective, see what's happening in their economy sure matters and I plan on doing more of it.
So, what is it that these meetings so far impressed you the most? What is the one thing that you're learning here that you would take back to your colleagues?
So I'll take a few things back. I would say we have a lot of common challenges. Listen, I feel in the United States that the real economy because of a resiliency that you mentioned but because of a surge of investment which isn't just AI, that surge of investment is broadening. That means we've got plenty of tailwinds that are giving some strength and durability to this economy. That sort of momentum is certainly not found everywhere in the world.
But what is striking to me are two things. Almost everywhere in the global economy showing resilience that I'm not sure I would have predicted five or six months ago given what's happening in geopolitics and hotspots around the world. If you had made me sort of give some IMF forecast of what's going on, I'm not sure I would have found that so many members of the G20 were hanging in there whose economies were doing well. I might have said that about the United States. I don't think I would have said that about so many.
The other thing which is a common challenge is I mentioned at the outset is inflation is not unique to the United States. So we're looking at it together. Each of us obviously make the choices that we feel we have to make given our own domestic remit from our own Congress from parliaments around the world. But there are spillovers and spillbacks and I heard I would say resolve from my colleagues around the world to deliver price stability. I've certainly delivered that resolve. We have different tools, different sequences, but I would say if I look back over the last few months, while we each did the right thing by our own judgment, by our own remit, it was a synchronous tightening in monetary policy in most places around the world and that means there's no free riders. We're seeing common things and we're taking action. And I view that as a positive development.
I very much agree. I think that the common vision around making sure that price stability is set and it gives that confidence to businesses and households that is so important for growth to continue. And yes, I agree that is one of the big messages from this meeting. We are running out of time. Is there anything you want to tell these people that I didn't have the wisdom to ask you?
So, Cristina did a wonderful job. I might invite you to my next press conference. These questions somehow are a little bit more cordial than some of the things I get. I'll just say this. I'll leave with a final comment which is anyone that's at the Federal Reserve, particularly anyone that feels fortunate to sit in my chair, I feel an incredible amount of gratefulness. I feel as though the world is moving faster than ever, changes to how we think about what happens, our economy is subject to differences now that might have been hard to believe five or 10 years ago, but I'm grateful. I'm grateful for my colleagues at the Federal Reserve, I'm grateful for the staff and I'm also grateful for the remarkable openness to new ideas. I have felt it in my private meetings with you. I felt it from my G20 colleagues. Our objective is to get policy right. Our objective is to think anew about questions. And the thing that we don't hear and we don't want to hear is well this is how we've always done it or this is what the model says or the model says this will happen after that.
I prefer frameworks to going to mean regressing models. And I think with your help, Cristina, with the help of our incredibly strong colleagues around the world, we're going to get through a time of huge consequence. And I believe optimistically, you might think naively, at least in the US, we're going to come out of this stronger with a more durable economy, more capable of leading the world on economic growth. So it's not zero sum. And hopefully we're going to come up with some new ideas that other countries with their own decision-making will say those work for us too. So thank you.
Well, ladies and gentlemen, Chairman Kevin Warsh, the defender of price stability. Thank you. Thank you very much everybody. Thank you.
avoided if countries pursue the right supply side reforms. These include improving the business and regulatory environment, refocusing scarce fiscal resources on productive infrastructure and human capital spending, increasing competition and trade integration across the region, accelerating digitalization and technology adoption. And you can see the power of technology adoption here in Asia. So we've already seen some of these reforms bearing fruit across the region. I would note Argentina and Ecuador, El Salvador, Honduras, and elsewhere are moving in this direction and trying to tackle these difficult supply side reforms.
Finally, I want to emphasize the IMF's role in the region. We stand ready to support the people and governments of this region as they address their own macroeconomic imbalances and navigate the current difficult global environment.
As you may know, we now have fund arrangements in 10 countries that span North, South and Central America as well as the Caribbean. They use up the full toolkit of the Fund's lending resources from precautionary arrangements, staff monitored programs, standby arrangements, EFFs.
You'll have seen recently the IMF's board approval of the program review in El Salvador. We've renewed our flexible credit line in Chile and we have new programs for Barbados and Bolivia.
We are also very engaged across the region with our capacity development and training programs including through a training center that we have in Paraguay that serves the governments of the region. And finally, as in every region of the world, the Fund continues to engage through Article IV consultations with all member countries where we can bring a cross-country perspective and provide an opportunity for an in-depth discussion of the challenges and policy options that the countries face. And so with these remarks, I'll turn to your questions. Thank you.
Thank you, Nigel. So, we have a very broad and diverse region. So, and also many countries to cover. So we're going to start first with a first round of regional questions. So if you have a question on the region, not on a country, a specific topic, please raise your hand. When I call on you, please identify yourself and the media outlet that you represent. Okay. So I'm going to be compiling those three questions on regional outlook. I'm going to start with the gentleman here in the first row.
Thank you. Good morning. Tier from Latin Finance. Do you expect more sound orthodox macroeconomic policies from policy makers in the region to build buffers and sustain economic growth and also address the fiscal issue as you mentioned as external shocks continue? Thank you.
I'm going to continue with the gentleman next. Okay.
Good morning. Antonio Vargas,
we're going to need some interpretation here. Should have done this earlier. What we can do also it's okay. Let's see. Is it working? Yeah. Yep. Okay. Go ahead.
Bueno. Okay. Very well then. Good morning. This is Antonio Vargas and I come from Medellin, Colombia. It's a small medium called Chucho Knows It, which is a newsletter and I have been covering business affairs for many years. And I have been participating in these meetings with the IMF and the World Bank since October 2013. So finally, we've seen each other. Maybe not with all of you, but we met in Lima, Bali, Marrakech, and now in Thailand and obviously in Washington. Sir, Mr. Chalk, this is a question addressed to you. When hearing what you said, what I'm really concerned about is that the growth in the region is lower than the one in the world, 3.1 as we were told by the IMF and the World Bank. And it turns out that our countries are growing very little, Colombia and others under two and a half percent. And the government in the case of Bogota in Colombia has said that the ideal situation would be to grow at 6%. What is still limiting growth in the region? Thank you very much. And that is my question.
It's two and then we go through another round or do you want me to continue compiling?
Yeah, let me take the two questions. So the first question was on what we expect in policies in the region and particularly on the fiscal. So I think it's fair to say we have seen a shift in policy direction across many countries in this region in the past I'd say couple of years. I'd also say we've had increased interest in the Fund's toolkit. I mentioned some of the new programs that we have across the region and the support we're providing to the region. I think this increase in interest in the Fund reflects both a desire to shift policies to a I'd say more orthodox direction, a more conservative fiscal policy to bring down debt, to stabilize economies, but also in part reflects the fact that the global environment facing the region is far more complex, far more difficult, far more prone to shocks than it has been in the past. So we do see a shift in policy direction and I think we see our role as supporting that shift towards more socially conscious, more fiscally responsible, more market oriented policies in the region. And I get the sense there's also much more support in the region both for the role of the Fund but also I think for the role of multilateralism more broadly and you're seeing that with some of the other IFIs.
The question on growth and being left behind. Yes, I think we share your concern. We have growth this year of two, as I said, two and a quarter this year and next year. You look at the region and you see it has natural resources, it has a large population, it has generally pretty good education systems, an entrepreneurial culture. These things should be generating higher growth. It's sort of puzzling why that's not the case. If you look in the decomposition of the growth, the key difference I think you find with other emerging market regions including here in Asia is Latin America has just struggled to get productivity higher. So the solutions are not one solution. I think there's no silver bullet to fix that problem.
I think the solutions as I mentioned in the outset they involve improving the business environment, tackling labor market informality, rethinking the tax systems to be less distortionary, more efficient. I think there's an important role for improving governance and crime prevention across the region that's a key constraint on growth. There's shortages of infrastructure and logistics, there's a need to invest in education, human capital. And as you see here in Asia, tech adoption is super important to drive productivity and growth. So, there's a long list of things to do. These aren't easy things. They require political will and social consensus to do these things.
But as I said at the start I am somewhat optimistic that we are seeing across a number of countries in Latin America, particularly Latin and Central America particularly, a real shift towards an appetite to take on these difficult reforms. And I think part of that is people can see and governments can see that they really pay off. We can see here in Asia that the countries that have done those reforms they're growing faster. Living standards are rising. They're converging to the level of income of the advanced economies and I think there's a lot of potential in South Central America and the Caribbean to do the same.
Thank you. Okay, so we're going to go to the lady in the third row.
Good morning, Manuela Duarte from Bloomberg, based in Argentina. I wanted to ask along these lines of what Nigel explained of greater engagement in the region there's also a greater alignment, a political alignment with the Trump administration in the US. I'm wondering what kind of engagement is there in these programs with the US administration, be it State Department, Treasury, and also we see it in Argentina but I think we see it across the region with these rising yields. How much of what typically the market would absorb is the IMF able to take on? Where is the limit in this increasingly difficult global market. Thank you.
Okay. So I think when we look at the region, yes there has been a shift in policy direction in many countries. That policy direction I think created two things. One is there's a greater appetite for the Fund's involvement and that involvement may be through our surveillance operations, through providing policy advice, that involvement can be through our capacity development operations and also through Fund financing. So you mentioned Fund financing but there's a number of ways that we're working to help the region. So that's one thing. There's a greater appetite for Fund involvement. And the second thing is I think the policy direction is something that we think we can support institutionally. As I said, it's more consistent with market oriented, fiscally responsible, socially conscious reforms that will we believe create macroeconomic stability, support growth, improve living standards. So I think that alignment of both interest and willingness to engage with the Fund and with a policy platform that we think works and we've seen work in other countries has meant that we're quite involved in the region as I mentioned and increasingly so.
In terms of the yields. So I think Fund financing plays a role in trying to meet financing gaps the countries face but it's not the important role. That's a temporary relief in providing a little less debt supply from countries onto the market. What's really important I think in the Fund program structure is that we provide a framework where countries can responsibly change their fiscal positions. So, not that they're issuing less debt today, but there's an expectation over time they'll be issuing less debt and that means that debt's more scarce and that tends to compress yields and make the financing situation easier for the country. So we play a role in providing some financing but I think the role we play in providing a framework for responsible macroeconomic policies through our programs is far more important and we've seen that in a number of countries in the region in Argentina, in Ecuador, in Bolivia now we have a new program and I think communicating that sort of medium-term fiscal adjustment is very important for shaping expectations and changing the financing and reducing spreads even as global rates are rising the region can reduce spreads and reduce its own financing costs.
Okay. So now we're going to start the round of country specific questions. So if you have any question, country specific question, raise your hand and I will call on you. I'm going to start with the gentleman here on the second row.
