Kristalina Georgieva

twenty countries around the world. I'm at Baxter and don to the spell Agremi on this weekend edition of Bloomberg Best. We have to help the world to not get into war. The managing director of the i m F, David even today there are moments when I'm pinching myself, am by the head of the IMF coming from where I'm coming from. Crystalina Georgieva on the David Rubinstein Show. Peer to Peer Conversations. If you're a president of the country in trouble, you bet the coult and Gorgyeva on the i m F

S Mission. All this and more coming up in the next hour of bird Best. All right, and you know, the International Monetary Fund does a huge amount of important work across the Globe right right, Denis, And some of that work goes on behind the scenes. Yeah, and Bloomberg David Rubinstein had a chance to go behind the scenes and take a look at how it all works. And that's right. Here's David in his wide ranging interview with

ahead of the i m F Crystalina Gorgeva. You've been a senior Commissioner of the European Commission and now you're the managing director of the i m F. And getting these positions was it more difficult because you were a woman where you're from a small country called Bulgaria. Where was there more prejudice against being a woman or from Bulgaria? Well, ultimately I got these jobs, so whatever the prejudice was, didn't call me back. If I'm too make a call

on that. I would say being from a small country always requires to work twice as hard others to prove yourself when you're growing up in a small country and then behind the Soviet curtain, iron curtain. Um, did you ever think that you would wind up in these kind of positions as a young girl? Did you imagine anything like that? David? Even today, there are moments when I'm pinching myself, Am I the head of the IMF coming

from where I'm coming from. So no, so many people don't know honestly what the I m F and the World Bank do. So can you explain what they actually do and why they're different and why we need them. So in the end of the Second World War, in a beautiful place in New Hampshire called Breton Woods, enlightened leaders came together and said, we have to help the world to not get into war, and to do so,

we need to help the economy to perform better. And they created these two sister institutions, the METH with the Mandate on Financial Stability, Growth and Employment, and the World Bank to invest in reconstruction of then war torn countries. Okay, so your job at the I m F is to take a country that, let's say has financial problems, say the economy is weak, or they have other kind of crises, and you can help them through that difficult time by lending them money. Um. And right now you have about

two seventies some billion dollars outstanding um. But you actually get paid it back. So the loans we provide are with very attractive interest rates because it is the money of our members. They extend to each other a helping hand for the poorest members, which are no interest. These are soft loans, much softer than the traditional IMAT loans. Countries pay us back. The poorer countries have longer mature the and longer time to serve their loans to us.

But what matters is not just the money. What matters is that we work with countries to make them stronger so they can repay with more ease. And that is absolutely paramount for people to know about the fund. We

are there to help countries to have strong economic fundamentals. Now, there are some people who say that sometimes when the I m F has lent money in the past, let's say to Argentina agrees, the terms are let's say draconian, and there's a lot of um I would say revulsion in those countries against the harsh I m F terms. Is that still fair or those things are the days

of the past? What the the Of course, we learn from experience, and one of the things we learned is that we have to pay very close attention to the impact of programs on people. Policies are for people. Macro decisions have micro consequences, and we are integrating this much more in the programs we do today, we think about social spending. Put the floor. Don't allow education and health to be so dramatically impacted that human capital of the

country is eroded. Let's suppose I'm the president of a country and I, you know, like some extra money, and can I call you up and say I'd like to borrow some money? And how hard is it to get

the money? How long does it take? And are people afraid of calling you because their own credit ratings might go down if it's known that they have to borrow money from the I m F. If you're a president of a country in trouble, you better call because if you do not have access to markets, and some developing countries don't, then the only way to boost your economy is to rely on the I m F, the World Bank Institution like us. Because this is an exogenous shock,

it is truly an emergency. The way we respond is different from what we do when a country isn't in trouble because it mismanaged its economy. It is the fault of those that have been governing at that time. What we are asking countries is two questions. One, please when you get the money, prioritize your health system and helping the most vulnerable people and the most vulnerable part of the economy. Two, show me the receipts. What did you

use the money for. We are advising countries to spend more, but keep the receipts. We want accountability not just to us, but to the taxpayers in the countries. And we have advanced already financial lifelines to seventy five country is in record short time. I mean in this place, when a crisis knocks on the door, we turn on a dime.

We are the world's first respondering crisis. Now, recently you have asked the g twenty two more or less have a debt forgiveness situation so that some people that owe you money wouldn't have to pay it back. Why did you need to do that when we got hit by this crisis? Four poor countries that is devastating twice as

much as it is for countries that are wealthier. Why because one they have weak health systems, Two they have very little capacity to respond on their own, and three a number of them have had high that levels by that time. So the economy is instand still. If dead services not put in stand stills. These countries have to decide do they pay doctors and nurses and safe lives

or serve that death. And that is bad for them, but it is also bad for the rest of the world, because a country in desperate situation falling to pieces turns into a security threat to its neighbors and the rest of the world. So we have lots of economists here. Um, what are the economists here telling you about the state of the economy in the world because of the pandemic? Are we likely to have a kind of global recession for another year or so? We have some optimism on

two grounds. The first one is exceptionally decisive action by central banks and by finance authorities. They put the floor under the world economy. We on our side have done our part for the countries that have no resources on their own. The second reason we are somewhat more optimistic today than we were a couple of months ago is that we see the world learning how to function with the pandemic still with us. But make no mistake, the

recovery is partial and it is uneven. We are not going to see in return to pre COVID conditions, and we are seeing big divergence. Parts of the economy doing really well and parts falling behind. And this is my biggest concern, that we may come on the other side of this crisis with more inequality, higher that higher deficits, and a climate cry I see still hanging on us. If we are strong as a world, we ought to

come together. A massive coordinated stimulus can make it so that we have a better economy on the other side. Then we head in twin So let's talk about your background. Um, As I mentioned the outset, you grew up in Bulgaria. Bulgaria at that time was behind the Iron Curtain, so it was not a powerful country in the west, and it was actually a small and I think relatively poor country. It turns out you were from a prominent family, but not a wealthy family. Can you tell us a little

bit about your background. So, yes, I was a daughter of ordinary people. My my father was a road engineer. My mother's it at home to look after us. Modest means, very happy childhood, very loving parents. Yes, my family was prominent, but I didn't know that until I was in my twenties. Why because my father was concerned that if we talk

about the revolutionary who was my great grandfather. And the fact that we can trace back our origins five centuries into the past, that may not jail well with the power of the prolettariat. Some when you're growing up no Bulgarian. Bulgarian, let's say the fifties and sixties, did were you required to learn Russian? Of course, of course engst No. I. Actually my mother was a Francophe so she sent me

to learn French. I had some French. When Gorbachev came to power in the Soviet Union and Glasses and Paris Striker came to Bulgaria, I was able to apply for a scholarship in the West, and in six months I learned English enough to pass to win a British Council scholarship to go to London School of Economics. That was incredible to be on the other side of the Iron Curtain. And what I found out over there, having access to information,

was that my country was broke. My country was so much deep in debt that I couldn't imagine how it is going to survive. Sure enough, two years later Bulgaria the economy collapse and Bulgaria turned a page away from socialism to market economy. How did you wind up in the Fiji Islands. Now that is a story. So when I was at London School of Economics, a professor notice me as somebody who is quite professional. He then became the dean of economics in the University of South Pacific

in Suva in Fiji. He sitting there wondering how he can find highly qualified professors that are willing to work for very little money, And so brilliant idea wrote to this Bulgarian woman. I got the letter, the invitation to go and teach. I had to virtually go to the map and see where Fiji was. Getting from Bulgaria to Fiji was an adventure. And so I'm lending in Fiji. I handed my passport to the passport control lady. She takes it, type something, looks at me and as where

are you from? I said, Bulgaria. She types again, looks at me and says there is no such country. The first Bulgarian to go to Fiji. Now the professor really liked me. He offered me a job. I still remember he offered me a job sixteen thousand dollars a year. I had no idea of my market value at that time. I was paid hundred dollars a month. But I still didn't take the job. Why because it was so far, so far from Bulgaria. So I went back. I got a chance to go to m I T. To come

to the United States and the resist history. What did you ever say, I'm not going back to Bulgaria. I'm now in the West and I'm going to stay in the West. Actually no. I came to m I T with the idea to spend one year, learn as much as I can and bring this knowledge back to Bulgaria. I actually had a contract to write a textbook on environmental economics as an outcome of this visit. But the World Bank called me up. They offered me a summer job.

I came for the summer. The fourth day I'm in this consulting job, I got a call and I got an offer to stay at the bank. Why. At that time, the Bank was looking for environmental economists ninety two post reel Check. They were desperate for women. They were very male dominated, so check, and they were opening up towards the Soviet Union formased and block Russian speakers. Check. So I took the job. I said, well, you know it's it's this is such an opportunity to work here, and

then I did incredibly interesting jobs within the bank. I raised up in the in the ranks, and one day I got the call to go to Europe. What did you actually do there? What was your job? I had first the job of Humanitarian and Crisis Commissioner Commissioner and

it was an incredible experience. I had the front seat position in all the terrible crisis that were happening at that time, from a Highiti earthquake to the Triple disaster in Japan to the Syrian war, and I was able to mobilize the very best of Europe to help people in terrible need and reformed the crisis response system of Europe. One of my strong memories of this time, I'm in a in a village talking to a Syrian girl who wants to go back to school, but there is no

schooling available. And I said to her, her name was Aisha, said, I said, I hope you would be able to go back to school. I walked out of there and I thought, my hoping means nothing to her. My acting would make a difference. And then we mobilized and we scaled up massively access to education for Syrian refugee children. So you talked about Brenton Woods and how the I m F and the World Bank were created in the late nineteen forties.

If you had been there, then how would you change the structure for the I m F or the World Bank? And might you think there could be some time in the future when some of the structure might be changed to make it better. But they were created very thoughtfully with the institutions that evolve with time. The shareholding changes as the world economy changes. What is required from us is to relentlessly pursue this adjustment. So the I m F in terms of its governance and the shareholding reflects

the world of today. Uh and that takes a lot of work bringing the membership together. The IMF has done a successful quarter adjustment. This is changing shareholding UM and now is due to take stock again. So between now and twenty twenty three it would be a very important job to do. So what percentage of the people who are under staff are they Americans or from overseas? And what percentage or male or female? And soft worth? So we have just about UM sevent of stuff from all

countries in the world and around twenty Americans. Logically, for many positions we recruit locally, like for some of the assistance coordinators for the professional pool, we recruit internationally and competitively. Uh. Broadly speaking, we are about the same men and women. But you wouldn't be surprised when we go up there are more men then we head down. And this is something that I am zeroing on um when I came directors. This is the layer of management that has most important

operational responsibility. Were women men Now they are forty sixty and I would drive this pipeline of talented women, not because I am obsessed with percentages, but because diversity matters, having different regional perspectives, having men and women working together

makes us more effective. We make better decisions as result. Historically, the World Bank President was picked more or less by the United States administration and President of the United States, and the head of the IMAP was more or less picked by Europeans. I would say, um, you foresee that that will change or that's going to continue for the foreseeable future. I think that there would be more and more demand to make these positions open for competition based

on merits. And even if you take this round, yes, I'm a European. Europe aligned to nominate me, But I'm a European from a country that in the mid nineties benefited from an IMF program. I do belong to emerging markets, and emerging markets were very loud in supporting me for that reason. So I want to see that process to continue. Why. Because institutions are much stronger when the whole world believes

they belong to all of us. Now China has become a major economic power, I guess the second largest economy in the world. Does China have the influence in the i m F the World Bank proportionate to which overall global economy? Now what they have, they have increased their shareholding in both institutions. They have been also very active in supporting the institutions. In the case of the I m F, China, the US, the rest of the world in this crisis stepped up significantly support for US to

be able to extend concessional lending. And I see the engagement of China as as constructive. That is so very important when we are in the midst of the worst crisis we have had since the Second World or so. The i m F stands for the International Monetary Fund.

Have you ever thought of changing it to say it stands for I am fair, I am friendly that most people here in the funds say it stands for it is mostly fiscal, but I much prefer the definition you give, and actually this is what I would relentlessly work for. We at the fund to always think of the people whose lives are impacted by the policies we recommend. Um. You're the most prominent person in the West from Bulgaria

as far as I know. Maybe there's somebody else, but I can't think of anybody else, So I assume you could go back to Bulgaria whenever you wanted to and run for president of Bulgaria. I don't know if that's a better job than the one you currently have, but you ever thought of running for office in Bulgaria or you're quite happy where you are. I always take the job I have as what takes my full concentration. I poured my heart in it. I never ever think of

what next. So as long as I'm the head of the I m F, it is I d I m F and the membership that has my complete medication, And that was Crystallina Georgieva, head of the I m f on the David Ribbonstein Show Peer to Peer Conversations, and that's it for this hour of Bloomberg Best. I'm at Baxter and I'm Denise Pellogreni, and this is Bloomberg