The Managing Director of the International Monetary Fund (IMF) has expressed satisfaction with the pace of debt restructuring among the four countries including Ghana.

According to the Managing Director, Kristalina Georgieva, the Fund is committed to helping advance the work on addressing debt vulnerabilities through the Global Sovereign Debt Roundtable so that “we better address issues like timeliness, predictability, and comparability of treatment”.

In a statement at the Conclusion of the first Meeting of the G20 Finance Ministers and Central Bank Governors, she said “On debt, as we heard from many, high debt service is a problem for a number of highly vulnerable countries, constraining resources that could go to development. I applaud the efforts that have been put in so far by G20 members to make the Common Framework deliver”. 

Global outlook risks and policy challenges persist

The IMF MD also said that the global outlook risks and policy challenges still persist.

Growth is projected this year at 3.1% versus 2.9% earlier projected. Inflation is down faster than expected.

“In our baseline, global headline inflation is expected to fall to 5.8% this year, and 4.4% next year. And this improved outlook also benefits developing economies that were cut off from markets for quite some time – such as Cote D’Ivoire, whose recent bond issuance was several times oversubscribed, followed by Benin and others”, she explained.

“This is encouraging, and yet we need to be conscious of three things”, she warned.

“First, the risks on the downside. One is more persistent inflation because of new price spikes that could result from geopolitical shocks and other supply disruptions – such as climate events – or from looser financial conditions, which could slow down the normalization of monetary policy. We can also have an upside risk, in which inflation falls even faster than expected. And that, of course, would be great for all of us”.

“Second, we should not be complacent because growth is still weak: 3% year after year, against an average of 3.8% in the pre-COVID decade. And even worse, in many places it is because of low productivity. Countries that are doing well, like the United States and some emerging market countries, have realized productivity gains”, she stressed.

“And third, we must be mindful that if interest rates are to remain higher for longer, financial sector risks could go up. So, they require careful monitoring. We must be vigilant for early signs of stress and systematically address vulnerabilities, especially in non-banking financial institutions”, she pointed out.

Central banks must finish job on inflation

For policymakers, Madam Georgieva said 2024 is shaping up to be a tricky year, advising central banks to finish the job on inflation by calibrating carefully whether they cut and how fast they cut, against the risk of being too slow and affecting growth negatively.

“Government authorities have to pursue fiscal consolidation to rebuild buffers and prepare for shocks that may still come. We advise medium-term fiscal plans to gradually help make this consolidation. When we look around the world, countries are in different places on monetary and fiscal policy, so authorities cannot simply take a cue from somebody else. We need to rely on national data to inform the appropriate policy stance. And many officials rightly spoke at this meeting about structural reforms, which they take on for productivity gains, for growth improvements, and for improvements in standards of living”, she outline.

Finally on Artificial Intelligence (AI), she said IMF staff has produced a very interesting country index on AI preparedness that can help inform governments’ efforts in dealing with the digital transition.”