Speaker 1: Bloomberg Audio Studios, podcasts, radio News. We've got the managing
Speaker 1: director of the International Monitoring Front, Crystalina gr Gaba, with
Speaker 1: us here in the studio, with us in the Plaza Hotel.
Speaker 2: Pret's welcome, great to be with you.
Speaker 1: We're here focused very much on climate solutions, on the
Speaker 1: challenges at the climate crisis has presented us as well.
Speaker 1: But I want to ask you about the situation facing
Speaker 1: the global economy. We've had the FED has cut interest rates,
Speaker 1: It's joined the easing party that global central banks have
Speaker 1: been taking in the past couple of months. We're about
Speaker 1: a month away from the update of the next IMF
Speaker 1: Global Economic Forecast. What's your reading now onto where we
Speaker 1: are in the global economy, how much those central bank
Speaker 1: right cuts are going to help?
Speaker 2: Well? The global economy has been remarkably resilient, despite the
Speaker 2: horrendous shocks of the last years, despite of interest rates
Speaker 2: fighting inflation. For the last more than year, we have
Speaker 2: seen global growth holding. We project three point two percent
Speaker 2: this year three point two percent next year. The two
Speaker 2: engines of this performance US economy and most of Emerging Asia,
Speaker 2: especially India. Assian we are now seeing interest rates in
Speaker 2: most economy is going down, and rightly so, because we
Speaker 2: also see the price being paid for interest rates being high.
Speaker 2: It is affecting somewhat prospects for growth in major economies.
Speaker 2: Two very important points for your audience. Number One, yes,
Speaker 2: growth is holding, but by historic standards it is not
Speaker 2: high enough to retain good prospects for our economies before
Speaker 2: the pandemic average growth three point eight percent. Two, we
Speaker 2: also have very high debt levels and that combination of
Speaker 2: slow growth and high debt is something that we at
Speaker 2: the Fund worry about. What we want to see is
Speaker 2: countries taking seriously the importance of fiscal prudence. So the
Speaker 2: center banks have done their job. They fought inflation. Inflation
Speaker 2: is going down, rates are going down. We need the
Speaker 2: fiscal site to be equally committeed. And of course we
Speaker 2: want to see more attention as to what drives growth.
Speaker 3: I want to go back to inflation now with the
Speaker 3: Fed finally making that big mood last week, that have
Speaker 3: a point card Inflation defeated, Mission accomplished done or would
Speaker 3: you say not necessarily yet watch it.
Speaker 2: Yes, we are in a very good place. We have
Speaker 2: been predicting soft lending. We would see inflation down and
Speaker 2: growth still remaining firmly in positive territory. This is where
Speaker 2: we are. We know that in the services inflation is
Speaker 2: still flaring a little bit more so the FAT is
Speaker 2: going to watch it. But broadly we think that the
Speaker 2: FED got it right and we would see how that
Speaker 2: evolves in the next meeting of the FAT. Not to
Speaker 2: exclude that could be more cuts. But again, why is
Speaker 2: the FED successful Because it is data driven, so they
Speaker 2: would watch inman data very carefully.
Speaker 1: I take note that you're worried about the fiscal side, though,
Speaker 1: how big a risk is what you're hearing in the
Speaker 1: US election campaign that's going to have a huge impact
Speaker 1: on US RISCO policy.
Speaker 2: Look, I mean, let's first give credit where credit is due.
Speaker 2: The US has helped the world economy to stay afloat
Speaker 2: in this very difficult time. So when we think about
Speaker 2: the response to the pandemic, the response to the war
Speaker 2: in Ukraine, these spike of energy and food prices, having
Speaker 2: the US economy to perk in the way it did
Speaker 2: a very good news for everybody. This being said, we
Speaker 2: have to all think of the piece that may be
Speaker 2: around the corner. What we learned in these last years
Speaker 2: is that we are in a more shock front world
Speaker 2: and having fiscal space to act should that become necessary.
Speaker 2: Is a message we sent to all our members.
Speaker 3: Is I remember one risk the fiscal possession of the
Speaker 3: United States and other well, I mean.
Speaker 2: The United States has the ability to fund itself in
Speaker 2: a fairly comfortable manner, right, what we see in some
Speaker 2: other countries they don't quite have that privilege. So the
Speaker 2: pressure for imminent action, of course, differs in different places.
Speaker 2: We do we have been saying that make sure that
Speaker 2: you are not pushing prices up by getting more money
Speaker 2: into the economy the economy than the economy can handle.
Speaker 2: So be careful.
Speaker 3: But you don't worry about the the US Federal Bank
Speaker 3: in particular that by that half a point content there
Speaker 3: maybe are putting a little bit more stimulus when the
Speaker 3: economy seems to be doing well.
Speaker 2: Right, there's growth, Yeah, the economy is doing well. Labor markets.
Speaker 2: You actually are reporting in your program that consumers seem
Speaker 2: to be saying, well, you're not as confident as we
Speaker 2: were before. Let's remember that when you have interest rates
Speaker 2: so high, that has impact, and it is the desired
Speaker 2: impact to bring inflation down, and the accompany not so
Speaker 2: desired to impact on consumer and business confidence. So my
Speaker 2: message is the following. We have to all be very
Speaker 2: watchful of whether there is risk of inflation to flare
Speaker 2: up again. What is happening around the world. You know,
Speaker 2: we just saw in the Middle East spike of a
Speaker 2: war with the accompanying not big but still visible impact
Speaker 2: on our prices. So we are not I mean, as
Speaker 2: the movie would go, we are not encances anymore. We're
Speaker 2: in a different world, more shockpron more unpredictable. Keep your
Speaker 2: powder dry, don't use all of it at once.
Speaker 1: One of the shocks that did upend the global economy
Speaker 1: is Russia's war in Ukraine, and the Fund was criticized
Speaker 1: recently for planning to restart annual economic consultations with Russia.
Speaker 1: Whose idea was that.
Speaker 2: Look, I mean, we do have an articles of agreement
Speaker 2: and they say you have to have regular consultations. The
Speaker 2: Russian case is a very complex case. This is not
Speaker 2: your normal article for so as you know, we have
Speaker 2: said we need to see whether we have all the data,
Speaker 2: we need to see whether we are ready, and at
Speaker 2: this moment we are not.
Speaker 1: What does that damage the Fund's reputation having that sort
Speaker 1: of confusion around starting and then stopping.
Speaker 2: I think that the Fund has been incredibly strong over
Speaker 2: this period of time of shock upon shock upon shock.
Speaker 2: We have supplied liquidity to countries that need it. We
Speaker 2: boosted reserves for countries so they can go through these shocks.
Speaker 2: And I think our reputation speaks for itself by the
Speaker 2: fact that our membership is increasing. We just got our
Speaker 2: one hundred ninety first member, the tiny country of Liechtenstein
Speaker 2: joining us. Why because we are an anchor in a
Speaker 2: sea of trouble. So I would argue that when you
Speaker 2: look at the Fund, you have a credible institution. We
Speaker 2: have come true. We help the world economy to steer
Speaker 2: through very difficult times. We will continue to do that.
Speaker 3: But is it tricky considering the war and in terms
Speaker 3: of advising Russia, like how to survive through this when
Speaker 3: most of the developed world, as you.
Speaker 2: Know, of course, cities as a horrible war. My heart
Speaker 2: bleeds for the people in Ukraine that have been so
Speaker 2: harshly hit by Russia's war. I want to see the
Speaker 2: war ending for the sake of Ukraine and for the
Speaker 2: sake of the global economy. It was incredibly damaging to
Speaker 2: the whole world. When we think of this is it
Speaker 2: is it possible to do Article four without enhancing Russia's capabilities?
Speaker 2: We have to sit back and think twice. And this
Speaker 2: is what you're doing right now?
Speaker 1: How long will you wait before that is?
Speaker 2: And why are some of our members, I mean, this
Speaker 2: is our the levels. Some of our members are saying,
Speaker 2: please if you're you're the only institution no treasure. Other
Speaker 2: members they're saying, you're the only institution that can come
Speaker 2: up with some credible assessment what is happening in Russia.
Speaker 2: So that is also something that is in the equation.
Speaker 2: But I'm telling you this is not an venture we
Speaker 2: would take ever lightly. And I care very deeply for
Speaker 2: the trust of my membership. We need to be there
Speaker 2: as an institution that holds strong in a world that
Speaker 2: has more trouble.
Speaker 3: I want to ask you about Argentina because you guys
Speaker 3: have put in there are some complaints by the Argentinian
Speaker 3: president about the IMAF negotiator. You put in a new negotiator,
Speaker 3: and we do wonder about, like what does that signal
Speaker 3: to other countries when they're maybe not happy with negotiations
Speaker 3: or policies.
Speaker 2: Or the IMASS So the answer is very simple. It
Speaker 2: is the negotiator himself who found the situation being propagated. Yeah,
Speaker 2: how do you negotiate with somebody who does not trust
Speaker 2: you at all? So it was that negotiator that looked
Speaker 2: into the situation in Argentina. That's Argenta in a needs
Speaker 2: help from the fund? Yes, do they need our advice? Yes,
Speaker 2: well let me send somebody who the president would listen to.
Speaker 2: And I can tell you that that was a mature judgment.
Speaker 2: And I stand by this judgment of my staffer, great professional,
Speaker 2: great professional, Rodrigo Valdez. I admire him for the maturity
Speaker 2: it has shown in that environment.
Speaker 1: And are you hopeful for improved relationships with Argentina as
Speaker 1: a result of that change? Will things proceed more smoothly
Speaker 1: with the IMF relationship there Argentina?
Speaker 2: Argentina faces very very tough problems to solve, and I
Speaker 2: know that Argentina would only benefit of having the IMF
Speaker 2: analytically to stand by Argentina and financially to stand by Argentina.
Speaker 2: And I'm r.
Speaker 3: I don't know if you realize it, but there's an
Speaker 3: election going on in the United States and I am
Speaker 3: I am curious. You've got two candidates with radically different
Speaker 3: positions on a lot of different issues, whether it's trade, immigration,
Speaker 3: the US's position on the global stage on economic policy.
Speaker 3: What's your advice for the next president of the United States.
Speaker 2: Look, I mean the elections in the United States. This
Speaker 2: is the choice of the American people. They make this choice,
Speaker 2: they have a president, and then this president sets up
Speaker 2: an agenda for the country. We are always there for
Speaker 2: our members to give them our best shot advice.
Speaker 3: So you remembers worried about the outcome of the US election.
Speaker 2: The whole of the membership is now facing a work
Speaker 2: in which sixty percent of people are going to the pulse. Yeah,
Speaker 2: you ask different countries. They have different worries, but are
Speaker 2: also very amazing stories that I hope you would tell.
Speaker 2: I was with Professor Hunise of Bangladesh. Here is a
Speaker 2: country in which the youth of the country said, no
Speaker 2: more corruption. We want to turn a page. And for
Speaker 2: us supporting this country to turn that page to get
Speaker 2: a good growth and good prospects for their people. Amazing.
Speaker 3: So listening to the younger population always important. Chris Allni Giorgava,
Speaker 3: thank you so much. We so appreciate your time here.
Speaker 3: Managing Director of course at the International Monetary fun Thank
Speaker 3: you so much, my pleasure