1 00:00:02,520 --> 00:00:08,440 Speaker 1: Bloomberg Audio Studios, podcasts, radio News. I am here at 2 00:00:08,440 --> 00:00:12,039 Speaker 1: the International Monetary Fund with its managing Director, Christlina Giergeva, 3 00:00:12,560 --> 00:00:16,840 Speaker 1: at a pretty intense moment for global trade, for global relationships, 4 00:00:17,200 --> 00:00:19,360 Speaker 1: and at the time where some of the major members 5 00:00:19,360 --> 00:00:22,560 Speaker 1: of the International Monetary Fund are entering into what looks. 6 00:00:22,360 --> 00:00:23,560 Speaker 2: Like a trade war with one another. 7 00:00:23,720 --> 00:00:27,520 Speaker 1: So at this moment, how different is the IMF's role 8 00:00:27,640 --> 00:00:31,320 Speaker 1: that has been traditionally given the landscape we're looking at. 9 00:00:32,760 --> 00:00:34,960 Speaker 3: Thank you for having me on the program. 10 00:00:35,560 --> 00:00:40,199 Speaker 4: We are created to bring countries together, and it is 11 00:00:40,880 --> 00:00:45,960 Speaker 4: valuable when there are non problems, even more valuable when 12 00:00:45,960 --> 00:00:50,639 Speaker 4: they need to find solutions to issues that divide them. So, 13 00:00:50,680 --> 00:00:54,120 Speaker 4: in that sense, very timely meeting, I very much look 14 00:00:54,160 --> 00:00:57,560 Speaker 4: forward to hear from the membership how they see steering 15 00:00:57,720 --> 00:01:01,120 Speaker 4: through this more turbulent time. 16 00:01:01,720 --> 00:01:03,600 Speaker 1: One thing that you talked about in the curtain raiser 17 00:01:04,160 --> 00:01:08,040 Speaker 1: was this idea that some members or some people actors 18 00:01:08,680 --> 00:01:12,600 Speaker 1: were maybe gaming the system in terms of free trade 19 00:01:12,680 --> 00:01:15,360 Speaker 1: and weren't necessarily being honest actors. 20 00:01:16,040 --> 00:01:19,160 Speaker 2: Does the IMF have a role to play in policing. 21 00:01:18,760 --> 00:01:23,520 Speaker 4: That The major role is for the World Trade Organization. 22 00:01:23,680 --> 00:01:27,120 Speaker 4: I started the day with Anghazi, and we talked exactly 23 00:01:27,160 --> 00:01:30,280 Speaker 4: about that what can be done so some of the 24 00:01:30,640 --> 00:01:31,560 Speaker 4: shortcomings of. 25 00:01:31,520 --> 00:01:35,520 Speaker 3: The past can be corrected. We also have a role, 26 00:01:35,600 --> 00:01:35,959 Speaker 3: it is. 27 00:01:35,920 --> 00:01:41,479 Speaker 4: In our Articles of Agreement to promote trade, and our 28 00:01:41,640 --> 00:01:46,800 Speaker 4: role is true the surveillance function we perform. We take 29 00:01:46,840 --> 00:01:52,000 Speaker 4: the post of every economy almost every year, and then 30 00:01:52,080 --> 00:01:54,040 Speaker 4: we come up with an assessment. 31 00:01:53,720 --> 00:01:57,440 Speaker 3: Of what are the. 32 00:01:56,720 --> 00:02:02,800 Speaker 4: Trends for this economy, how they interject with the rest 33 00:02:02,800 --> 00:02:03,400 Speaker 4: of the world. 34 00:02:04,240 --> 00:02:06,720 Speaker 3: And as we do that, of course we look at trade. 35 00:02:07,000 --> 00:02:13,799 Speaker 4: Why because trade is an engine for growth, and what 36 00:02:13,880 --> 00:02:20,519 Speaker 4: we see these days is that when trade goes backwards 37 00:02:20,720 --> 00:02:25,440 Speaker 4: or slows down, that has implications for global growth. As 38 00:02:25,480 --> 00:02:32,200 Speaker 4: you know, we just projected the growth expectations for twenty 39 00:02:32,280 --> 00:02:36,480 Speaker 4: twenty five. We are downgrading by half a percentage point 40 00:02:38,000 --> 00:02:42,720 Speaker 4: from three point three to two point eight percent our 41 00:02:43,240 --> 00:02:44,480 Speaker 4: forecast for the world. 42 00:02:45,120 --> 00:02:46,480 Speaker 3: We are downgrading our. 43 00:02:46,360 --> 00:02:53,000 Speaker 4: Forecast for almost all countries, including the United States, as 44 00:02:53,040 --> 00:02:55,240 Speaker 4: a result of trade tensions. 45 00:02:55,360 --> 00:02:59,079 Speaker 2: Yeah. One thing that in our world economic outlook. 46 00:02:58,840 --> 00:03:01,680 Speaker 1: You put the transfers in the United States up to 47 00:03:01,720 --> 00:03:05,280 Speaker 1: about forty from twenty seven percent back in January when. 48 00:03:05,120 --> 00:03:06,079 Speaker 2: You first publish it. 49 00:03:07,080 --> 00:03:10,880 Speaker 1: If the terriffs stay as they have been proposed from 50 00:03:10,960 --> 00:03:12,000 Speaker 1: the United States. 51 00:03:12,320 --> 00:03:14,160 Speaker 2: Do you expect that chance to go up materially? 52 00:03:15,639 --> 00:03:21,680 Speaker 4: This is based on the announcements of tariffs that have 53 00:03:21,880 --> 00:03:27,639 Speaker 4: been then suspended, but not for China, so. 54 00:03:27,560 --> 00:03:28,960 Speaker 3: It's a complicated story. 55 00:03:29,080 --> 00:03:32,800 Speaker 4: The short answer is that we are operating at the 56 00:03:32,880 --> 00:03:39,440 Speaker 4: time of very high uncertainty. If we see faster resolution 57 00:03:40,000 --> 00:03:46,680 Speaker 4: of trade tensions, that would possibly lift up projections for 58 00:03:46,800 --> 00:03:53,240 Speaker 4: global growth, great for investors, great for families. If, however, 59 00:03:54,280 --> 00:04:01,440 Speaker 4: we do not succeed and uncertainty remains very high, tarif 60 00:04:01,720 --> 00:04:05,720 Speaker 4: problems hang on our head for much longer, then we 61 00:04:05,880 --> 00:04:10,520 Speaker 4: actually can see even further reduction in global growth, and 62 00:04:10,560 --> 00:04:14,200 Speaker 4: then the danger of recession looms bigger. 63 00:04:15,160 --> 00:04:16,480 Speaker 3: What is our advice? 64 00:04:17,040 --> 00:04:21,240 Speaker 4: Please talk with each other, find a way to resolve differences, 65 00:04:21,680 --> 00:04:24,440 Speaker 4: and above all, reduce uncertainty. 66 00:04:24,640 --> 00:04:27,640 Speaker 1: Uncertainty is bad for business, and I think a lot 67 00:04:27,680 --> 00:04:31,440 Speaker 1: of people have raised that issue. There has been speculation, 68 00:04:31,600 --> 00:04:35,440 Speaker 1: including by this administration, but the United States could potentially 69 00:04:35,440 --> 00:04:36,840 Speaker 1: even withdraw from the IMF. 70 00:04:37,560 --> 00:04:38,640 Speaker 3: Do you see that as. 71 00:04:38,680 --> 00:04:41,240 Speaker 2: Likely or possible? Do you have contingency plans for that? 72 00:04:42,640 --> 00:04:46,599 Speaker 4: We have very good relations with the United States. We 73 00:04:46,680 --> 00:04:51,560 Speaker 4: have traditionally worked very closely with each and every US administration. 74 00:04:52,160 --> 00:04:57,080 Speaker 4: We have now established relations with this administration. The United 75 00:04:57,160 --> 00:04:59,799 Speaker 4: States is carrying count reviews if its. 76 00:04:59,600 --> 00:05:03,279 Speaker 3: Partici pation in international organization. This is very fair. 77 00:05:03,360 --> 00:05:06,040 Speaker 4: They have the writer as a member to look into 78 00:05:06,080 --> 00:05:10,320 Speaker 4: the mirror and say do we have value from participation 79 00:05:10,440 --> 00:05:11,160 Speaker 4: at the IMF. 80 00:05:11,560 --> 00:05:13,920 Speaker 3: And I can tell you I'm convinced that they look 81 00:05:13,960 --> 00:05:17,800 Speaker 3: at this and they say yes. Why. First, we're the 82 00:05:17,880 --> 00:05:21,520 Speaker 3: only institution that can rescue countries in trouble. 83 00:05:22,040 --> 00:05:25,919 Speaker 4: There are many countries that US cares about that the 84 00:05:25,960 --> 00:05:29,479 Speaker 4: Fund is there to help them in a moment of 85 00:05:31,080 --> 00:05:36,880 Speaker 4: high trouble. Two, we're the only financial institution. Listen, that 86 00:05:37,680 --> 00:05:42,359 Speaker 4: is like a savings bank. US puts money, we lend, 87 00:05:43,080 --> 00:05:45,480 Speaker 4: then we give it back to the US with interest. 88 00:05:45,600 --> 00:05:48,440 Speaker 3: The last two years we have paid three point. 89 00:05:48,240 --> 00:05:51,560 Speaker 4: One billion dollars in interest in the United States. So 90 00:05:52,080 --> 00:05:56,000 Speaker 4: you know, the concern is are taxpayers of the United 91 00:05:56,040 --> 00:06:00,279 Speaker 4: States paying In the case of the fund, no tree. 92 00:06:00,880 --> 00:06:02,559 Speaker 3: We are promoting. 93 00:06:02,040 --> 00:06:10,680 Speaker 4: Things that US cares deeply about private sector let growth, discipline, transparency, accountability, 94 00:06:11,040 --> 00:06:14,200 Speaker 4: and I think for all these reasons, and also let 95 00:06:14,240 --> 00:06:17,039 Speaker 4: me not forget where are we we are sitting with 96 00:06:17,160 --> 00:06:20,200 Speaker 4: you two blocks from the White House. I think that 97 00:06:20,640 --> 00:06:24,120 Speaker 4: the outcome of this review for the IMF would be 98 00:06:24,160 --> 00:06:25,680 Speaker 4: as great institution. 99 00:06:25,279 --> 00:06:30,000 Speaker 1: We stay, it's become more difficult and incompatible for China 100 00:06:30,040 --> 00:06:32,200 Speaker 1: and the US to both remain members. 101 00:06:33,440 --> 00:06:43,440 Speaker 4: Well, they talk to each other within the IMF membership arrangement, 102 00:06:44,279 --> 00:06:48,320 Speaker 4: and even if they are in very tense place, it 103 00:06:48,400 --> 00:06:51,039 Speaker 4: is good to be able to talk with each other. 104 00:06:51,360 --> 00:06:53,720 Speaker 3: Also to know where this country is headed. 105 00:06:54,600 --> 00:06:57,720 Speaker 4: I'll tell you I was, as you know, I'm a Bulgarian. 106 00:06:57,800 --> 00:07:00,400 Speaker 4: I grew up on the other side of the Iron Curtain, 107 00:07:00,440 --> 00:07:03,680 Speaker 4: and I remember vividly during the Cold War there was 108 00:07:03,720 --> 00:07:07,640 Speaker 4: something created called Economic Commission for Europe. 109 00:07:07,760 --> 00:07:10,160 Speaker 3: That had Europe and. 110 00:07:10,080 --> 00:07:13,160 Speaker 4: The Soviet Union and the form of the Soviet Bloc, 111 00:07:13,920 --> 00:07:17,320 Speaker 4: the United States and Canada. Why was it created? So 112 00:07:17,440 --> 00:07:20,040 Speaker 4: that is space to talk with each other. 113 00:07:20,280 --> 00:07:21,360 Speaker 3: Now we at this. 114 00:07:21,440 --> 00:07:26,120 Speaker 4: Space, we exist, and I think that the benefit of 115 00:07:26,200 --> 00:07:31,800 Speaker 4: also putting pressure for directions for the United States to 116 00:07:31,920 --> 00:07:38,040 Speaker 4: have a place for that is actually higher than maybe 117 00:07:38,640 --> 00:07:40,440 Speaker 4: the naked eye would see. 118 00:07:40,760 --> 00:07:43,520 Speaker 1: Another role of the International Monetary Fund is to monitor 119 00:07:43,560 --> 00:07:47,160 Speaker 1: financial stability. It's an important role, especially right now given 120 00:07:47,160 --> 00:07:49,560 Speaker 1: all of the turmoil that we've seen in markets. There's 121 00:07:49,560 --> 00:07:54,680 Speaker 1: been some speculation about whether President Trump could fire the 122 00:07:54,680 --> 00:07:58,520 Speaker 1: that chair, and I'm wondering, does that concern you as 123 00:07:58,560 --> 00:07:59,520 Speaker 1: a threat. 124 00:07:59,320 --> 00:08:02,200 Speaker 2: To financial stability? Ifter and power were to be removed 125 00:08:02,200 --> 00:08:03,960 Speaker 2: from his office before instrument. 126 00:08:03,840 --> 00:08:07,800 Speaker 4: We know from many, many, many decades of experience that 127 00:08:08,680 --> 00:08:13,720 Speaker 4: central banks are essential for price stability, They're essential for 128 00:08:14,120 --> 00:08:19,560 Speaker 4: financial stability, and they have very important instruments for it. 129 00:08:19,680 --> 00:08:22,360 Speaker 3: They have the. 130 00:08:21,560 --> 00:08:25,600 Speaker 4: Rates that they can impact, they can step up. They 131 00:08:25,640 --> 00:08:29,640 Speaker 4: have one instrument that I want to emphasize, which is credibility. 132 00:08:30,080 --> 00:08:35,160 Speaker 4: And credibility comes with independence. So if we want the 133 00:08:35,320 --> 00:08:41,640 Speaker 4: comfort that when the next financial stress comes, then the 134 00:08:41,720 --> 00:08:47,360 Speaker 4: fact can act decisively as it did last summer when 135 00:08:47,360 --> 00:08:50,120 Speaker 4: we had the California story popping up. 136 00:08:50,679 --> 00:08:52,359 Speaker 3: This particular instrument. 137 00:08:52,160 --> 00:08:55,360 Speaker 4: Credibility is really very valuable to protect. 138 00:08:56,280 --> 00:08:59,040 Speaker 1: At this point, looking out, what is your biggest concern 139 00:08:59,240 --> 00:09:02,120 Speaker 1: when it comes to actru stability at a time where 140 00:09:02,320 --> 00:09:05,160 Speaker 1: there might be a seismic change in terms. 141 00:09:04,840 --> 00:09:07,520 Speaker 2: Of the trade structure of the global economy. 142 00:09:08,360 --> 00:09:13,200 Speaker 4: My biggest concern is that the level of uncertainty is 143 00:09:13,400 --> 00:09:19,040 Speaker 4: virtually off the charts, and we have to see how 144 00:09:19,080 --> 00:09:24,000 Speaker 4: that uncertainty can be brought down because as long as 145 00:09:24,040 --> 00:09:28,880 Speaker 4: it is so high, investors would be reluctant to make 146 00:09:28,960 --> 00:09:34,800 Speaker 4: investment decisions, consumers would be postponing their purchases, and we 147 00:09:34,880 --> 00:09:39,640 Speaker 4: will drive the economy into what you ask me, could 148 00:09:39,720 --> 00:09:44,760 Speaker 4: it happen that is a recession. We do not project 149 00:09:45,920 --> 00:09:50,600 Speaker 4: recession in our assessment of where the world is headed. 150 00:09:52,040 --> 00:09:57,120 Speaker 4: But if we have this cloud of uncertainty coming lower 151 00:09:57,160 --> 00:10:03,280 Speaker 4: and lower, making it difficult for the business community and 152 00:10:03,559 --> 00:10:09,000 Speaker 4: for households to take decisions, we could have a self 153 00:10:09,040 --> 00:10:13,640 Speaker 4: inflicted injury that I guarantee you we would regret. I 154 00:10:13,800 --> 00:10:18,000 Speaker 4: hope here in these meetings people would talk with each 155 00:10:18,040 --> 00:10:19,359 Speaker 4: other and they would. 156 00:10:19,160 --> 00:10:22,239 Speaker 3: Lift up that cloud of uncertainty. 157 00:10:22,640 --> 00:10:24,960 Speaker 2: Is there ever a moment like that? If experienced before? 158 00:10:26,080 --> 00:10:30,080 Speaker 3: You know? Here I am. I have been. 159 00:10:31,440 --> 00:10:36,000 Speaker 4: Fortunate to see massive transformation. My own country came from 160 00:10:36,679 --> 00:10:39,040 Speaker 4: central planning into markets. 161 00:10:38,559 --> 00:10:40,960 Speaker 3: And it was a very dramatic experience. 162 00:10:41,840 --> 00:10:48,319 Speaker 4: What did I learn That a shock is an incredible opportunity, 163 00:10:48,800 --> 00:10:51,079 Speaker 4: The impossible becomes possible. 164 00:10:51,559 --> 00:10:52,920 Speaker 3: Germany lift it up. 165 00:10:53,080 --> 00:10:56,839 Speaker 4: It's that break And I hope that countries would look 166 00:10:56,880 --> 00:11:00,880 Speaker 4: into this moment and then they would take them and say, 167 00:11:01,040 --> 00:11:03,880 Speaker 4: what is it that I can do for my own 168 00:11:03,960 --> 00:11:09,720 Speaker 4: country that I have been reluctant, shy doing, and then 169 00:11:10,200 --> 00:11:14,880 Speaker 4: maybe we would see advancements of reforms that would bring 170 00:11:15,280 --> 00:11:17,160 Speaker 4: better opportunities to people. 171 00:11:17,640 --> 00:11:20,120 Speaker 2: Kretolini, Yorkeva, thank you so much for taking the time