Speaker 1: Bloomberg Audio Studios, podcasts, radio News. I am here at
Speaker 1: the International Monetary Fund with its managing Director, Christlina Giergeva,
Speaker 1: at a pretty intense moment for global trade, for global relationships,
Speaker 1: and at the time where some of the major members
Speaker 1: of the International Monetary Fund are entering into what looks.
Speaker 2: Like a trade war with one another.
Speaker 1: So at this moment, how different is the IMF's role
Speaker 1: that has been traditionally given the landscape we're looking at.
Speaker 3: Thank you for having me on the program.
Speaker 4: We are created to bring countries together, and it is
Speaker 4: valuable when there are non problems, even more valuable when
Speaker 4: they need to find solutions to issues that divide them. So,
Speaker 4: in that sense, very timely meeting, I very much look
Speaker 4: forward to hear from the membership how they see steering
Speaker 4: through this more turbulent time.
Speaker 1: One thing that you talked about in the curtain raiser
Speaker 1: was this idea that some members or some people actors
Speaker 1: were maybe gaming the system in terms of free trade
Speaker 1: and weren't necessarily being honest actors.
Speaker 2: Does the IMF have a role to play in policing.
Speaker 4: That The major role is for the World Trade Organization.
Speaker 4: I started the day with Anghazi, and we talked exactly
Speaker 4: about that what can be done so some of the
Speaker 4: shortcomings of.
Speaker 3: The past can be corrected. We also have a role,
Speaker 3: it is.
Speaker 4: In our Articles of Agreement to promote trade, and our
Speaker 4: role is true the surveillance function we perform. We take
Speaker 4: the post of every economy almost every year, and then
Speaker 4: we come up with an assessment.
Speaker 3: Of what are the.
Speaker 4: Trends for this economy, how they interject with the rest
Speaker 4: of the world.
Speaker 3: And as we do that, of course we look at trade.
Speaker 4: Why because trade is an engine for growth, and what
Speaker 4: we see these days is that when trade goes backwards
Speaker 4: or slows down, that has implications for global growth. As
Speaker 4: you know, we just projected the growth expectations for twenty
Speaker 4: twenty five. We are downgrading by half a percentage point
Speaker 4: from three point three to two point eight percent our
Speaker 4: forecast for the world.
Speaker 3: We are downgrading our.
Speaker 4: Forecast for almost all countries, including the United States, as
Speaker 4: a result of trade tensions.
Speaker 2: Yeah. One thing that in our world economic outlook.
Speaker 1: You put the transfers in the United States up to
Speaker 1: about forty from twenty seven percent back in January when.
Speaker 2: You first publish it.
Speaker 1: If the terriffs stay as they have been proposed from
Speaker 1: the United States.
Speaker 2: Do you expect that chance to go up materially?
Speaker 4: This is based on the announcements of tariffs that have
Speaker 4: been then suspended, but not for China, so.
Speaker 3: It's a complicated story.
Speaker 4: The short answer is that we are operating at the
Speaker 4: time of very high uncertainty. If we see faster resolution
Speaker 4: of trade tensions, that would possibly lift up projections for
Speaker 4: global growth, great for investors, great for families. If, however,
Speaker 4: we do not succeed and uncertainty remains very high, tarif
Speaker 4: problems hang on our head for much longer, then we
Speaker 4: actually can see even further reduction in global growth, and
Speaker 4: then the danger of recession looms bigger.
Speaker 3: What is our advice?
Speaker 4: Please talk with each other, find a way to resolve differences,
Speaker 4: and above all, reduce uncertainty.
Speaker 1: Uncertainty is bad for business, and I think a lot
Speaker 1: of people have raised that issue. There has been speculation,
Speaker 1: including by this administration, but the United States could potentially
Speaker 1: even withdraw from the IMF.
Speaker 3: Do you see that as.
Speaker 2: Likely or possible? Do you have contingency plans for that?
Speaker 4: We have very good relations with the United States. We
Speaker 4: have traditionally worked very closely with each and every US administration.
Speaker 4: We have now established relations with this administration. The United
Speaker 4: States is carrying count reviews if its.
Speaker 3: Partici pation in international organization. This is very fair.
Speaker 4: They have the writer as a member to look into
Speaker 4: the mirror and say do we have value from participation
Speaker 4: at the IMF.
Speaker 3: And I can tell you I'm convinced that they look
Speaker 3: at this and they say yes. Why. First, we're the
Speaker 3: only institution that can rescue countries in trouble.
Speaker 4: There are many countries that US cares about that the
Speaker 4: Fund is there to help them in a moment of
Speaker 4: high trouble. Two, we're the only financial institution. Listen, that
Speaker 4: is like a savings bank. US puts money, we lend,
Speaker 4: then we give it back to the US with interest.
Speaker 3: The last two years we have paid three point.
Speaker 4: One billion dollars in interest in the United States. So
Speaker 4: you know, the concern is are taxpayers of the United
Speaker 4: States paying In the case of the fund, no tree.
Speaker 3: We are promoting.
Speaker 4: Things that US cares deeply about private sector let growth, discipline, transparency, accountability,
Speaker 4: and I think for all these reasons, and also let
Speaker 4: me not forget where are we we are sitting with
Speaker 4: you two blocks from the White House. I think that
Speaker 4: the outcome of this review for the IMF would be
Speaker 4: as great institution.
Speaker 1: We stay, it's become more difficult and incompatible for China
Speaker 1: and the US to both remain members.
Speaker 4: Well, they talk to each other within the IMF membership arrangement,
Speaker 4: and even if they are in very tense place, it
Speaker 4: is good to be able to talk with each other.
Speaker 3: Also to know where this country is headed.
Speaker 4: I'll tell you I was, as you know, I'm a Bulgarian.
Speaker 4: I grew up on the other side of the Iron Curtain,
Speaker 4: and I remember vividly during the Cold War there was
Speaker 4: something created called Economic Commission for Europe.
Speaker 3: That had Europe and.
Speaker 4: The Soviet Union and the form of the Soviet Bloc,
Speaker 4: the United States and Canada. Why was it created? So
Speaker 4: that is space to talk with each other.
Speaker 3: Now we at this.
Speaker 4: Space, we exist, and I think that the benefit of
Speaker 4: also putting pressure for directions for the United States to
Speaker 4: have a place for that is actually higher than maybe
Speaker 4: the naked eye would see.
Speaker 1: Another role of the International Monetary Fund is to monitor
Speaker 1: financial stability. It's an important role, especially right now given
Speaker 1: all of the turmoil that we've seen in markets. There's
Speaker 1: been some speculation about whether President Trump could fire the
Speaker 1: that chair, and I'm wondering, does that concern you as
Speaker 1: a threat.
Speaker 2: To financial stability? Ifter and power were to be removed
Speaker 2: from his office before instrument.
Speaker 4: We know from many, many, many decades of experience that
Speaker 4: central banks are essential for price stability, They're essential for
Speaker 4: financial stability, and they have very important instruments for it.
Speaker 3: They have the.
Speaker 4: Rates that they can impact, they can step up. They
Speaker 4: have one instrument that I want to emphasize, which is credibility.
Speaker 4: And credibility comes with independence. So if we want the
Speaker 4: comfort that when the next financial stress comes, then the
Speaker 4: fact can act decisively as it did last summer when
Speaker 4: we had the California story popping up.
Speaker 3: This particular instrument.
Speaker 4: Credibility is really very valuable to protect.
Speaker 1: At this point, looking out, what is your biggest concern
Speaker 1: when it comes to actru stability at a time where
Speaker 1: there might be a seismic change in terms.
Speaker 2: Of the trade structure of the global economy.
Speaker 4: My biggest concern is that the level of uncertainty is
Speaker 4: virtually off the charts, and we have to see how
Speaker 4: that uncertainty can be brought down because as long as
Speaker 4: it is so high, investors would be reluctant to make
Speaker 4: investment decisions, consumers would be postponing their purchases, and we
Speaker 4: will drive the economy into what you ask me, could
Speaker 4: it happen that is a recession. We do not project
Speaker 4: recession in our assessment of where the world is headed.
Speaker 4: But if we have this cloud of uncertainty coming lower
Speaker 4: and lower, making it difficult for the business community and
Speaker 4: for households to take decisions, we could have a self
Speaker 4: inflicted injury that I guarantee you we would regret. I
Speaker 4: hope here in these meetings people would talk with each
Speaker 4: other and they would.
Speaker 3: Lift up that cloud of uncertainty.
Speaker 2: Is there ever a moment like that? If experienced before?
Speaker 3: You know? Here I am. I have been.
Speaker 4: Fortunate to see massive transformation. My own country came from
Speaker 4: central planning into markets.
Speaker 3: And it was a very dramatic experience.
Speaker 4: What did I learn That a shock is an incredible opportunity,
Speaker 4: The impossible becomes possible.
Speaker 3: Germany lift it up.
Speaker 4: It's that break And I hope that countries would look
Speaker 4: into this moment and then they would take them and say,
Speaker 4: what is it that I can do for my own
Speaker 4: country that I have been reluctant, shy doing, and then
Speaker 4: maybe we would see advancements of reforms that would bring
Speaker 4: better opportunities to people.
Speaker 2: Kretolini, Yorkeva, thank you so much for taking the time