Thank you for joining us. My name is Julie Kozack and I'm the director of communications at the IMF. Welcome to this press briefing of the IMFC here in Bangkok at the conclusion of the IMF World Bank annual meetings. Let me begin by thanking our Thai hosts for their warm hospitality. And I'm delighted once again to have with me here today the chair of the IMFC, His Excellency Mohammad Al-Jadaan, Minister of Finance of Saudi Arabia, and managing director of the IMF, Kristalina Georgieva. They will first share with you their reflections on the IMFC meeting and then we will turn to you for your questions. Your Excellency, the floor is yours.
Thank you very much and welcome everyone. And good afternoon. Let me begin by expressing my and our sincere appreciation to the government and the people of the Kingdom of Thailand for hosting this annual meeting and for the really brilliant and excellent and warm hospitality. I would like also to really thank all the IMFC members, Kristalina, and all of the IMF staff for their diligence and collaborative work. The global economy continues to undergo profound challenges while demonstrating remarkable resilience. However, mounting challenges are testing economic stability and weighing on growth prospects. Wars and conflicts are imposing a heavy humanitarian toll with significant economic cost and spillovers. Disruptions to critical waterways and trade routes also threaten energy and food security. Trade tensions and supply chain disruptions are increasing uncertainty and price pressures. High public debt and rising sovereign bond yields are amplifying the financial vulnerabilities and tightening financial conditions. Meanwhile, artificial intelligence offers significant opportunities to boost productivity. But, and there's always a but when it comes to AI, it also carries risks that could widen economic disparities. These challenges are especially acute in low-income countries and fragile states. The message from the IMFC members is clear. There's no room for complacency. Fiscal authorities need credible medium-term plans to rebuild buffers while protecting both vulnerable populations and growth-enhancing investments. Central bank independence is essential to price stability and policy credibility. Structural reforms must support private sector led growth and investment. And international cooperation remains critical to addressing excessive global imbalances and trade tensions. Managing public debt is another important priority. Members reaffirmed their commitment to a more timely, predictable, and coordinated debt restructuring, including through the G20 common framework. I'm also pleased with the several other important areas of consensus. First, members underscore the importance of secure and resilient energy flows and to uphold the principles of freedom of navigation as essential to global economic stability. Second, members emphasize support for countries facing debt vulnerabilities and stress the need for stronger IMF capacity to support low-income countries. Third, members welcome the comprehensive IMF policy reviews covering surveillance, debt analysis, lending, and capacity development, and they called for their prompt, effective, and even-handed implementation. Importantly, members reaffirmed their commitment to a strong quota-based and adequately resourced IMF. To this end, the Diriyah guiding principles will guide all future discussions on quota and governance reforms, ensuring the fund remains effective and representative of its memberships. As always, international cooperation remains essential. Lasting stability and prosperity can only be achieved through greater economic integration, not fragmentation. In this complex global environment, the IMF continues to play an incredibly indispensable role. We strongly support the fund and stand behind its management in these very difficult times, and we deeply appreciate the fund's excellent work and ongoing support to its entire membership. I'll stop here and give you the floor, Kristalina. Thank you.
Thank you very much, Mohamed. Congratulations on your extension for one more year. It is a reflection of the leadership you have provided to IMFC, and also a recognition of your incredible talent to run these meetings in a very disciplined manner, and always keeping the inclusiveness, so everybody feels part of them, to heart. I am very much looking forward to the next year of our work together. So, let me give you my reflection of the meetings. They were marked by both optimism and worry. Optimism from the resilience of the global economy, the promise of AI, the dynamism of Asia. But AI is also recognized to be a source of worry, and so are inflation, high levels of debt, wars, climate risks. Our membership discussed these issues intensely in the last week. I want to highlight three takeaways from our discussions. First, our membership recognized that investment in good policies and institutions have anchored the global economy. Resilience doesn't fall from the sky. And also recognized that AI boom provides the main source of support, but that also is a risk because when we are dependent on one particular driver of growth, it is like we stand on one leg. We heard quite a lot of discussion of the divergence in economic fortunes, and a lot of discussion on the cracks in the foundation of this resilience. As energy and fiscal buffers are being depleted, inflation remains stubborn, and rising interest rates are adding to countries' already high debt service pressures. Second, the membership is looking at what is going on in different places with an increased anxiety about this divergence in the global economy. And actually conversations in different rooms were very different depending on whether you are on the high with AI investment or you are in a region affected by war. And that difference of being part of the AI value chain, being an energy exporter not affected by war, or the opposite, energy importing countries not part of the AI value chain, they are falling further behind. And they are falling further behind from a position of vulnerability to begin with. Third, there was recognition of the incredible speed with which AI is advancing. The decisions policy makers make today will shape the path of a very powerful technology. And quite a lot of attention to we want the benefits but we want to manage the risks. We want to see guardrails to protect people and businesses and the future of countries. And on that count I was very impressed by how much this topic of cooperation, cooperation between governments, AI companies, and other stakeholders but more broadly a spirit of cooperation. It was helped by the fact that we held our meetings with the big replica of the royal barge that reminds us we are all in the same boat. So, what does that all mean for policy makers? A great deal of agreement on the necessary responses for central banks to remain laser focused on preserving price stability, for finance ministries to urgently repair the cracks in the fiscal house and bring that down where it is high, and for regulators and supervisors to be alert to risks from rising leverage, non-bank financial institutions, cyber attacks and fraud. And on the last point, the Thai authorities led us towards the Bangkok Blueprint, a step towards a safe, inclusive, and responsible framework for digital finance. And a word on us at the IMF, our membership gave us some praise and I take this to my staff that, you know, changing world, we are changing as well. The members welcomed the policy reviews, make the IMF's work more granular and risk-based, helping us identify vulnerabilities early, and support high-impact reforms. I also want to recognize the generosity of our membership in supporting capacity development. This week we secured more than a hundred million dollars in new commitments from 10 partners: France, Germany, Ireland, Italy, Japan, Kazakhstan, Luxembourg, the Netherlands, Spain, and Switzerland. Significant achievement goes a long way to respond to calls from our members to help them build further their economic resilience. These meetings also have shown that in a world of repetitive shocks and geopolitical fragmentation still there is desire for multilateral dialogue and cooperation. It is there. We have been able to act as a convener and facilitator of this dialogue by bringing together thousands of delegates, bringing those of you who are not Thai to Bangkok. And I want to finish on that count with our host. What a fantastic host Thailand has been. And want to thank the Thai authorities, all the Thai people here that were around us and Thai society as a whole for an outstanding hospitality and impeccable organization. Not only they provided all the facilities and the attention, but they actually have gifted us a song which the Prime Minister and I were able to sing last night. So to the Thai people, let me say you welcomed us, you shared your incredible culture with us, and you showed us the very best of your beautiful country. And you also helped us take with us the wisdom of the late King His Majesty King Bhumibol. These are the words we would bring back to Washington. Benefits and positive outcomes do not arise on their own. Rather, they must be gradually cultivated, accumulated, and strengthened over time. Our work never ends, and we take that back to inspire our people. Thank you.
Thank you very much, Your Excellency and Managing Director. We will now open the floor for questions. When I call on you, a microphone will be brought to you. Please do give your name and affiliation before asking your question. All right, we'll start right here in the middle, the man in the gray, right here. Right here. With the gray suit, white shirt.
Asad Hashim with AFP. My question is for the Managing Director. You've spoken today again and earlier in the week about how your message to the membership this week has been that low-income, oil-importing, non-AI exposed countries are extremely vulnerable in this current stage and to this current shock. My question is, what's your message been to those countries, particularly at a time when there are some concerns about all these calls for fiscal consolidation, at a time when their needs are greater, not less? Thank you.
Thank you for this question. The first message to our low-income members is that the work always starts at home. Make sure that you have policies that are well calibrated for your circumstances, that you raise revenues fairly, you don't allow rich people to avoid carrying out their responsibility for society. And that you set your spending priorities with two main objectives in mind. To pave the way for more growth, to be part of the developments, including the AI development, and to protect the most vulnerable people in society. I can tell you that people everywhere, but especially in poorer countries, they don't like inflation. Inflation is like a tax on the poor. They don't like unpredictability. They want policies that are clear. And they do want to see that the government creates conditions for private activities. So, entrepreneurship can help. But of course, we recognize that low-income countries are more severely affected when there are winds, when there are crosscurrents, and that they should be a priority for us. What we do at the Fund are two things. One, we have a relentless pursuit of more resources for low-income countries. At the Fund, we once again brought the membership towards more support for the poverty reduction and growth trust. That is our concessional finance vehicle. We took decisions that allow us to more than triple lending on concessional terms vis-a-vis before this reform was put in place. We then got, and this is very important, more money for capacity development because if countries can themselves manage their finances better that goes a long way to help their people. We don't necessarily see need for dramatic adjustment in many of the low-income countries. Why? And I want to give many of them credit. Over the last years we have worked together to bring that on a downward trajectory and to strengthen their own fiscal position. In fact, if you look at the data, where is debt to GDP going up? In rich countries. Where is it going slightly down? In low-income countries. But of course when inflation is up and interest rates are up, debt payments, even when you bring your debt down, debt payment as a share of your revenues goes up. In low-income countries it went up from 8% to 14% in the last years. So, that is to say I would conclude with this. We all have responsibility to help countries with high level of debt if they need to restructure it to restructure it fast and effectively and Minister Al Jadaan was the one that led the G20 common framework. We have responsibility when that is sustainable but liquidity is insufficient to help countries with domestic resource mobilization and then bring international financing in a coordinated manner and then create conditions for private investment. From both sides when we do our best it translates into better lives for people.
All right. Let's move on. I'll go right here in front. This gentleman right here in the middle.
Good morning. I'm Bassel Al Khatib. I'm editor-in-chief of Business Echoes. It's a business news website located in Lebanon. First of all, I would like to thank the IMF and Thai authorities for this great opportunity that brought us together here today. My question is what are your views on the economic outlook in the MENA region, especially in the struggling countries like Lebanon and Iraq. I want to highlight this issue.
Well, we have downgraded the growth projections for the MENA region as a whole by 2%. It would have been much worse if the countries in the MENA region, many of them have not done reforms and building buffers. I want to particularly recognize the GCC countries, where over the last years, there was firm pursuit of reforms. And as a result, they can and of course they also have the revenue set that they have had over the years, they're able to cushion the impact of the shock that has affected them. And of course, the worst part of the shock is actually not in money, it is in impact on lives of people. But then we have countries in the MENA region that are more vulnerable. You mentioned two, you mentioned Lebanon and Iraq. In the case of Iraq, the authorities requested a program, and we will support Iraq very firmly. We would get to Iraq both money and policy support. In the case of Lebanon, we are in very intense discussions with the Lebanese authorities. We have made significant progress towards a program. We have still a bit more work to do together, and I'm confident we will be successful. The most important task for us is to recognize that divergence in the MENA region and concentrate our efforts on the countries that are more vulnerable. In that sense, a program for Iraq, a program for Lebanon would go a long way. We have a program for Egypt. It is moving forward to be completed by the end of the year. We have a very good successful program with Jordan. So, we see our role as an anchor financially and also in terms of policy engagement to be really a very important one, especially in these days.
Would you like to add anything to that?
I would just say briefly really MENA is largely two groups. Not necessarily beside each other, but they're two groups. There are groups who came to these shocks prepared. They did a lot of homework. They did structural reform. They built buffers. So, they are way more able to deal with the shock. And these will include most of the GCC countries, for example. And there are countries who entered this phase already tired. So, they are really going through tough times and does not have the capacity or the buffers. And within MENA there are countries who actually helped through this crisis significantly. I mean, I am biased because I am a Saudi, but I can tell you not because I am Saudi, that's a fact. If it was not for example investments that were made by countries like Saudi Arabia the shock from the energy crisis it would have been a lot worse.
