Bloomberg Audio Studios, podcasts, radio News. I am here at the International Monetary Fund with its managing Director, Christlina Giergeva, at a pretty intense moment for global trade, for global relationships, and at the time where some of the major members of the International Monetary Fund are entering into what looks.
Like a trade war with one another.
So at this moment, how different is the IMF's role that has been traditionally given the landscape we're looking at.
Thank you for having me on the program.
We are created to bring countries together, and it is valuable when there are non problems, even more valuable when they need to find solutions to issues that divide them. So, in that sense, very timely meeting, I very much look forward to hear from the membership how they see steering through this more turbulent time.
One thing that you talked about in the curtain raiser was this idea that some members or some people actors were maybe gaming the system in terms of free trade and weren't necessarily being honest actors.
Does the IMF have a role to play in policing.
That The major role is for the World Trade Organization. I started the day with Anghazi, and we talked exactly about that what can be done so some of the shortcomings of.
The past can be corrected. We also have a role, it is.
In our Articles of Agreement to promote trade, and our role is true the surveillance function we perform. We take the post of every economy almost every year, and then we come up with an assessment.
Of what are the.
Trends for this economy, how they interject with the rest of the world.
And as we do that, of course we look at trade.
Why because trade is an engine for growth, and what we see these days is that when trade goes backwards or slows down, that has implications for global growth. As you know, we just projected the growth expectations for twenty twenty five. We are downgrading by half a percentage point from three point three to two point eight percent our forecast for the world.
We are downgrading our.
Forecast for almost all countries, including the United States, as a result of trade tensions.
Yeah. One thing that in our world economic outlook.
You put the transfers in the United States up to about forty from twenty seven percent back in January when.
You first publish it.
If the terriffs stay as they have been proposed from the United States.
Do you expect that chance to go up materially?
This is based on the announcements of tariffs that have been then suspended, but not for China, so.
It's a complicated story.
The short answer is that we are operating at the time of very high uncertainty. If we see faster resolution of trade tensions, that would possibly lift up projections for global growth, great for investors, great for families. If, however, we do not succeed and uncertainty remains very high, tarif problems hang on our head for much longer, then we actually can see even further reduction in global growth, and then the danger of recession looms bigger.
What is our advice?
Please talk with each other, find a way to resolve differences, and above all, reduce uncertainty.
Uncertainty is bad for business, and I think a lot of people have raised that issue. There has been speculation, including by this administration, but the United States could potentially even withdraw from the IMF.
Do you see that as.
Likely or possible? Do you have contingency plans for that?
We have very good relations with the United States. We have traditionally worked very closely with each and every US administration. We have now established relations with this administration. The United States is carrying count reviews if its.
Partici pation in international organization. This is very fair.
They have the writer as a member to look into the mirror and say do we have value from participation at the IMF.
And I can tell you I'm convinced that they look at this and they say yes. Why. First, we're the only institution that can rescue countries in trouble.
There are many countries that US cares about that the Fund is there to help them in a moment of high trouble. Two, we're the only financial institution. Listen, that is like a savings bank. US puts money, we lend, then we give it back to the US with interest.
The last two years we have paid three point.
One billion dollars in interest in the United States. So you know, the concern is are taxpayers of the United States paying In the case of the fund, no tree.
We are promoting.
Things that US cares deeply about private sector let growth, discipline, transparency, accountability, and I think for all these reasons, and also let me not forget where are we we are sitting with you two blocks from the White House. I think that the outcome of this review for the IMF would be as great institution.
We stay, it's become more difficult and incompatible for China and the US to both remain members.
Well, they talk to each other within the IMF membership arrangement, and even if they are in very tense place, it is good to be able to talk with each other.
Also to know where this country is headed.
I'll tell you I was, as you know, I'm a Bulgarian. I grew up on the other side of the Iron Curtain, and I remember vividly during the Cold War there was something created called Economic Commission for Europe.
That had Europe and.
The Soviet Union and the form of the Soviet Bloc, the United States and Canada. Why was it created? So that is space to talk with each other.
Now we at this.
Space, we exist, and I think that the benefit of also putting pressure for directions for the United States to have a place for that is actually higher than maybe the naked eye would see.
Another role of the International Monetary Fund is to monitor financial stability. It's an important role, especially right now given all of the turmoil that we've seen in markets. There's been some speculation about whether President Trump could fire the that chair, and I'm wondering, does that concern you as a threat.
To financial stability? Ifter and power were to be removed from his office before instrument.
We know from many, many, many decades of experience that central banks are essential for price stability, They're essential for financial stability, and they have very important instruments for it.
They have the.
Rates that they can impact, they can step up. They have one instrument that I want to emphasize, which is credibility. And credibility comes with independence. So if we want the comfort that when the next financial stress comes, then the fact can act decisively as it did last summer when we had the California story popping up.
This particular instrument.
Credibility is really very valuable to protect.
At this point, looking out, what is your biggest concern when it comes to actru stability at a time where there might be a seismic change in terms.
Of the trade structure of the global economy.
My biggest concern is that the level of uncertainty is virtually off the charts, and we have to see how that uncertainty can be brought down because as long as it is so high, investors would be reluctant to make investment decisions, consumers would be postponing their purchases, and we will drive the economy into what you ask me, could it happen that is a recession. We do not project recession in our assessment of where the world is headed.
But if we have this cloud of uncertainty coming lower and lower, making it difficult for the business community and for households to take decisions, we could have a self inflicted injury that I guarantee you we would regret. I hope here in these meetings people would talk with each other and they would.
Lift up that cloud of uncertainty.
Is there ever a moment like that? If experienced before?
You know? Here I am. I have been.
Fortunate to see massive transformation. My own country came from central planning into markets.
And it was a very dramatic experience.
What did I learn That a shock is an incredible opportunity, The impossible becomes possible.
Germany lift it up.
It's that break And I hope that countries would look into this moment and then they would take them and say, what is it that I can do for my own country that I have been reluctant, shy doing, and then maybe we would see advancements of reforms that would bring better opportunities to people.
Kretolini, Yorkeva, thank you so much for taking the time