Bloomberg Audio Studios, podcasts, radio News. We've got the managing director of the International Monitoring Front, Crystalina gr Gaba, with us here in the studio, with us in the Plaza Hotel.
Pret's welcome, great to be with you.
We're here focused very much on climate solutions, on the challenges at the climate crisis has presented us as well. But I want to ask you about the situation facing the global economy. We've had the FED has cut interest rates, It's joined the easing party that global central banks have been taking in the past couple of months. We're about a month away from the update of the next IMF
Global Economic Forecast. What's your reading now onto where we are in the global economy, how much those central bank right cuts are going to help?
Well? The global economy has been remarkably resilient, despite the horrendous shocks of the last years, despite of interest rates fighting inflation. For the last more than year, we have seen global growth holding. We project three point two percent this year three point two percent next year. The two engines of this performance US economy and most of Emerging Asia,
especially India. Assian we are now seeing interest rates in most economy is going down, and rightly so, because we also see the price being paid for interest rates being high. It is affecting somewhat prospects for growth in major economies. Two very important points for your audience. Number One, yes, growth is holding, but by historic standards it is not high enough to retain good prospects for our economies before
the pandemic average growth three point eight percent. Two, we also have very high debt levels and that combination of slow growth and high debt is something that we at the Fund worry about. What we want to see is countries taking seriously the importance of fiscal prudence. So the center banks have done their job. They fought inflation. Inflation is going down, rates are going down. We need the
fiscal site to be equally committeed. And of course we want to see more attention as to what drives growth.
I want to go back to inflation now with the Fed finally making that big mood last week, that have a point card Inflation defeated, Mission accomplished done or would you say not necessarily yet watch it.
Yes, we are in a very good place. We have been predicting soft lending. We would see inflation down and growth still remaining firmly in positive territory. This is where we are. We know that in the services inflation is still flaring a little bit more so the FAT is going to watch it. But broadly we think that the FED got it right and we would see how that evolves in the next meeting of the FAT. Not to
exclude that could be more cuts. But again, why is the FED successful Because it is data driven, so they would watch inman data very carefully.
I take note that you're worried about the fiscal side, though, how big a risk is what you're hearing in the US election campaign that's going to have a huge impact on US RISCO policy.
Look, I mean, let's first give credit where credit is due. The US has helped the world economy to stay afloat in this very difficult time. So when we think about the response to the pandemic, the response to the war in Ukraine, these spike of energy and food prices, having the US economy to perk in the way it did a very good news for everybody. This being said, we have to all think of the piece that may be
around the corner. What we learned in these last years is that we are in a more shock front world and having fiscal space to act should that become necessary. Is a message we sent to all our members.
Is I remember one risk the fiscal possession of the United States and other well, I mean.
The United States has the ability to fund itself in a fairly comfortable manner, right, what we see in some other countries they don't quite have that privilege. So the pressure for imminent action, of course, differs in different places. We do we have been saying that make sure that you are not pushing prices up by getting more money into the economy the economy than the economy can handle. So be careful.
But you don't worry about the the US Federal Bank in particular that by that half a point content there maybe are putting a little bit more stimulus when the economy seems to be doing well.
Right, there's growth, Yeah, the economy is doing well. Labor markets. You actually are reporting in your program that consumers seem to be saying, well, you're not as confident as we were before. Let's remember that when you have interest rates so high, that has impact, and it is the desired impact to bring inflation down, and the accompany not so desired to impact on consumer and business confidence. So my
message is the following. We have to all be very watchful of whether there is risk of inflation to flare up again. What is happening around the world. You know, we just saw in the Middle East spike of a war with the accompanying not big but still visible impact on our prices. So we are not I mean, as the movie would go, we are not encances anymore. We're in a different world, more shockpron more unpredictable. Keep your powder dry, don't use all of it at once.
One of the shocks that did upend the global economy is Russia's war in Ukraine, and the Fund was criticized recently for planning to restart annual economic consultations with Russia. Whose idea was that.
Look, I mean, we do have an articles of agreement and they say you have to have regular consultations. The Russian case is a very complex case. This is not your normal article for so as you know, we have said we need to see whether we have all the data, we need to see whether we are ready, and at this moment we are not.
What does that damage the Fund's reputation having that sort of confusion around starting and then stopping.
I think that the Fund has been incredibly strong over this period of time of shock upon shock upon shock. We have supplied liquidity to countries that need it. We boosted reserves for countries so they can go through these shocks. And I think our reputation speaks for itself by the fact that our membership is increasing. We just got our one hundred ninety first member, the tiny country of Liechtenstein joining us. Why because we are an anchor in a sea of trouble. So I would argue that when you
look at the Fund, you have a credible institution. We have come true. We help the world economy to steer through very difficult times. We will continue to do that.
But is it tricky considering the war and in terms of advising Russia, like how to survive through this when most of the developed world, as you.
Know, of course, cities as a horrible war. My heart bleeds for the people in Ukraine that have been so harshly hit by Russia's war. I want to see the war ending for the sake of Ukraine and for the sake of the global economy. It was incredibly damaging to the whole world. When we think of this is it is it possible to do Article four without enhancing Russia's capabilities? We have to sit back and think twice. And this is what you're doing right now?
How long will you wait before that is?
And why are some of our members, I mean, this is our the levels. Some of our members are saying, please if you're you're the only institution no treasure. Other members they're saying, you're the only institution that can come up with some credible assessment what is happening in Russia. So that is also something that is in the equation. But I'm telling you this is not an venture we would take ever lightly. And I care very deeply for
the trust of my membership. We need to be there as an institution that holds strong in a world that has more trouble.
I want to ask you about Argentina because you guys have put in there are some complaints by the Argentinian president about the IMAF negotiator. You put in a new negotiator, and we do wonder about, like what does that signal to other countries when they're maybe not happy with negotiations or policies.
Or the IMASS So the answer is very simple. It is the negotiator himself who found the situation being propagated. Yeah, how do you negotiate with somebody who does not trust you at all? So it was that negotiator that looked into the situation in Argentina. That's Argenta in a needs help from the fund? Yes, do they need our advice? Yes, well let me send somebody who the president would listen to. And I can tell you that that was a mature judgment.
And I stand by this judgment of my staffer, great professional, great professional, Rodrigo Valdez. I admire him for the maturity it has shown in that environment.
And are you hopeful for improved relationships with Argentina as a result of that change? Will things proceed more smoothly with the IMF relationship there Argentina?
Argentina faces very very tough problems to solve, and I know that Argentina would only benefit of having the IMF analytically to stand by Argentina and financially to stand by Argentina. And I'm r.
I don't know if you realize it, but there's an election going on in the United States and I am I am curious. You've got two candidates with radically different positions on a lot of different issues, whether it's trade, immigration, the US's position on the global stage on economic policy. What's your advice for the next president of the United States.
Look, I mean the elections in the United States. This is the choice of the American people. They make this choice, they have a president, and then this president sets up an agenda for the country. We are always there for our members to give them our best shot advice.
So you remembers worried about the outcome of the US election.
The whole of the membership is now facing a work in which sixty percent of people are going to the pulse. Yeah, you ask different countries. They have different worries, but are also very amazing stories that I hope you would tell. I was with Professor Hunise of Bangladesh. Here is a country in which the youth of the country said, no more corruption. We want to turn a page. And for us supporting this country to turn that page to get a good growth and good prospects for their people. Amazing.
So listening to the younger population always important. Chris Allni Giorgava, thank you so much. We so appreciate your time here. Managing Director of course at the International Monetary fun Thank you so much, my pleasure