IMF Managing Director lauds debt restructuring progress in Ghana, other African nations
Kristalina Georgieva, Managing Director of the International Monetary Fund (IMF), has praised the pace of debt restructuring among select nations, notably Ghana, as part of broader efforts to address debt vulnerabilities.
Speaking at the Conclusion of the first Meeting of the G20 Finance Ministers and Central Bank Governors, Ms Georgieva underscored the IMF’s commitment to facilitating discussions on debt issues through the Global Sovereign Debt Roundtable.
Amidst cautious optimism about the global economic outlook, Ms Georgieva warned of persistent risks and policy challenges. While projecting improved growth at 3.1% this year and noting a faster-than-expected decline in inflation, she cautioned against complacency.
She highlighted downside risks, including potential inflation spikes from geopolitical shocks and the need for continued vigilance in monitoring financial sector vulnerabilities.
“In our baseline, global headline inflation is expected to fall to 5.8% this year, and 4.4% next year. And this improved outlook also benefits developing economies that were cut off from markets for quite some time – such as Cote D’Ivoire, whose recent bond issuance was several times oversubscribed, followed by Benin and others.
“This is encouraging, and yet we need to be conscious of three things.
“First, the risks on the downside. One is more persistent inflation because of new price spikes that could result from geopolitical shocks and other supply disruptions – such as climate events – or from looser financial conditions, which could slow down the normalization of monetary policy. We can also have an upside risk, in which inflation falls even faster than expected. And that, of course, would be great for all of us”.
“Second, we should not be complacent because growth is still weak: 3% year after year, against an average of 3.8% in the pre-COVID decade. And even worse, in many places it is because of low productivity. Countries that are doing well, like the United States and some emerging market countries, have realized productivity gains.
“And third, we must be mindful that if interest rates are to remain higher for longer, financial sector risks could go up. So, they require careful monitoring. We must be vigilant for early signs of stress and systematically address vulnerabilities, especially in non-banking financial institutions”, she pointed out.
Central banks face a delicate balancing act in managing inflation pressures, with Ms Georgieva advising careful calibration to avoid negatively impacting growth. She emphasized the importance of fiscal consolidation and structural reforms in bolstering economic resilience, noting the varying policy landscapes across nations.
On the technological front, Ms Georgieva noted the IMF’s efforts in producing an index on AI preparedness to aid governments in navigating the digital transition. As global economic dynamics evolve, the IMF remains vigilant, advocating for strategic policy responses to sustain economic stability and foster long-term growth.
