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G20 Finance Ministers Meet: IMF's Kristalina Georgieva Outlines Key Policy Priorities

Georgieva cautioned countries against sliding into protectionism while offering "green subsidies" for "green technologies".

G20 Finance Ministers Meet: IMF's Kristalina Georgieva Outlines Key Policy Priorities

Inflation control, debt restructuring and harnessing digital progress are crucial policy priorities, according to International Monetary Fund's Kristalina Georgieva.

The year of uncertainties could also be a turning point with inflation declining and growth bottoming out, Georgieva, the managing director at IMF, wrote in a blog post on Wednesday, ahead of the G20 meet of Finance Ministers and Central Bank Governors on Friday.

According to the IMF’s recent projections, global growth is seen slowing to 2.9% this year and then rising to 3.1% in 2024. The majority of this growth is expected to come from emerging markets and developing economies, accounting for about 80% of the global total.

In its World Economic Outlook report in January, the IMF forecasted India’s GDP growth at 6.8% for FY23, 6.1% for FY24 and 6.8% for FY25.

Stay The Course On Monetary Tightening

"The reality is that growth is still subpar and price pressures are still too high and, after three years of shocks, too many economies and people are still hurting badly," she said.

Notwithstanding some easing in food prices, 349 million people in 79 countries faced acute food insecurity, she wrote.

According to her, fiscal measures should be "temporary and laser-focused" towards protecting the vulnerable. "In most countries, targeted measures need to be coupled with gradual fiscal tightening to rebuild buffers and ensure debt sustainability."

Bringing inflation back to target would require to stay the course on monetary tightening and a communication of policy goals, so that sudden repricing in financial markets can be avoided, she said.

Georgieva told policymakers to be mindful of adverse spillovers to emerging and developing economies—including through a stronger U.S. dollar and capital outflows.

Ground rules for debt resolution and their processes need better clarifying, she said.

Speaking at the curtain-raiser press conference on Tuesday, India's Chief Economic Advisor Anantha Nageswaran said that ways to "forestall" debt vulnerabilities must be addressed. "The discussion will be both on handling these situations before they arise and after they arise," Nageswaran said.

The IMF, World Bank, and India’s G20 presidency are expected to convene a global sovereign debt round table, which will meet in-person in Bengaluru for the first time.

The round table is expected to discuss how creditors (public and private) and debtor countries can work together, assess shortcomings and find ways to approach them.

Georgieva also called for greater solidarity to stand with low-income and vulnerable countries.

"Others with the strength and capacity to do so need to stand up and help address fundraising shortfalls—especially on subsidy resources in the Poverty Reduction and Growth Trust—and deliver additional contributions to the new Resilience and Sustainability Trust."

"This also means determination to advance the 16th General Review of Quotas, so we can complete it by the end of the year."

Avoid Protectionism

As climate change realities hit closer to home, countries have taken efforts to realign their fiscal framework and accelerate the green transition.

Climate change and climate action financing is expected to be a priority as India chairs the G20 this year.

The IMF Director said that policies should stay focused on that transition—rather than providing a competitive advantage to domestic firms. Green subsidies, though helpful, require careful design to avoid wasteful spending or trade tensions, she said.

"In other words, we must not slide into protectionism. This would make it even more difficult for poorer countries to access new technologies and support the green transition."