IMF Chief Says Prevailing ‘Radical Uncertainty’ Urges Creation of Better Scenario for Next 50 Years

Speaking at the plenary session of the Annual Meetings of the World Bank Group (WB) and the IMF, Georgieva emphasized that this includes strengthening investment on solid economic foundations and international cooperation. She noted that these ideas are embodied in the principles of Marrakech, which were outlined this week in collaboration with the World Bank and the Moroccan government.

According to her, this direction involves implementing appropriate policies and reforms, promoting public action, and involving the private sector, all with the goal of combating inflation and reducing poverty and inequality.

“Clearly we are facing a higher-for-longer era, but a sharp further tightening of financial condition could hit markets, banks, and non-banks,” she explained.

In this context, Georgieva continued, caution is more necessary than ever in conducting fiscal policy, as debt and deficits are much higher than pre-pandemic levels. She called for transformative reforms to stimulate medium-term growth, suggesting that the implementation of such reforms could increase production levels by 8% over four years.

To finance these actions, she advocated for fiscal reforms in addition to external financing, which could generate additional revenue amounting to up to 5% of GDP for emerging countries and 9% for low-income countries.

Georgieva also paid tribute to HM King Mohammed VI, the Moroccan government, and the people of Morocco. She stated, “You have shown the world the meaning of courage and resilience—as well as your exceptional culture, hospitality, and warm hearts.”

On the other hand, the President of the World Bank, Ajay Banga, pointed out that the world is facing a decline in progress in the fight against poverty, an existential climate crisis, food insecurity, and fragility, in addition to multiple conflicts exacerbating inequalities.

In this context, economic growth is receding in a significant portion of the developing world, with a predicted decline from 6% to 5% over two decades, and a forecasted growth of only 4% over the next seven years. This means that for every percentage point lost, 100 million people fall into poverty, and an additional 50 million people fall into extreme poverty, he warned.

Banga emphasized that the World Bank has a duty to be an institution that spreads optimism, highlighting the importance of reform to “fulfill this promise and meet expectations.”

To address the pressing challenges, the World Bank now has a new vision and mission, namely to create a world without poverty on a livable planet, he stated.

Banga noted that this vision is capable of promoting effective development based on sustainable growth, job creation, human development, public finance and debt management, food security, and access to affordable water and energy.

The plenary session was marked by a Royal Message addressed to the participants in the Annual Meetings of the WB/IMF, which are taking place in Morocco from October 9 to 15. The message was read by Mr. Omar Kabbaj, Counselor to HM the King.

This global event, returning to African soil 50 years later, sees the participation of financial and banking leaders and economists from 190 member countries.

The "radical uncertainty" currently prevailing in the world calls for the creation of a better scenario for the next fifty years, stated International Monetary Fund (IMF) Managing Director Kristalina Georgieva in Marrakech on Friday.
13 October 2023