International Monetary Fund Managing Director Kristalina Georgieva made the following statement yesterday at the conclusion of her virtual participation in the G7 Leaders’ Summit:
“I would like to thank Prime Minister Boris Johnson and the UK authorities for setting up a forward-looking agenda for the G7 summit, focusing on the most pressing challenges facing the world today.
First, bringing the pandemic to an end everywhere. The IMF has been warning about dangerously diverging recoveries—and most recent data confirm that this trend not only continues, but deepens. Together with the World Bank, the WHO, and the WTO, IMF staff recently proposed a $50 billion plan to end the pandemic by vaccinating at least 40 percent of people in every country by the end of this year and 60 percent by mid-2022.
The most urgent part of the plan is to redirect excess vaccine doses from advanced economies to the developing world. I welcome the G7’s commitment of one billion doses in the next year—it will make a material difference in the fight against the pandemic. Next, it is important to ensure that vials turn into actual shots in the arm and that production capacity is increased to protect against downside risks.
In terms of financing of the plan, there has been progress over the last weeks. From the start, we have emphasized the crucial importance of grants and, by our assessment, about one-third of the needed $35 billion in grant financing has now been secured from public and private sources. This is encouraging, but the work must continue to raise the rest—and to ensure transparent and well-coordinated implementation. The war is not yet won. This is why together with the World Bank, WHO, WTO and other institutions, we are forming a ‘war room’ — a task force to monitor and accelerate the implementation of this plan.
Second, as the world emerges from this crisis we need to be mindful of its legacies and work to overcome them. To build a better future, it will be vital to boost productivity and growth, resolve debt overhangs, and strengthen economic policy frameworks. Policymakers will face difficult choices when gradually withdrawing policy support and proper targeting will be critical to support vulnerable people and viable firms.
The G7’s emphasis on building better after the pandemic—and especially the focus on addressing Climate Change—is crucial. I welcome Leaders’ intention to launch a new clean, green initiative to catalyze green infrastructure investment, especially for developing countries. Combined with policies to incentivize investments such as carbon price and disclosures of climate-related risks, a green investment push will not only help to address the climate crisis, but also accelerate growth and create millions of new jobs.
As policymakers cope with these post-pandemic challenges, they will need to boost revenues to finance investment in better public goods for their citizens. In this respect, I was heartened by the G7’s looking forward to reach agreement on a global minimum corporate tax at the July meeting of G20 finance ministers and central bank governors.
Finally, I want to express my gratitude for the G7’s support of a new $650 billion allocation of the IMF’s Special Drawing Rights (SDRs)—the largest issuance in history. This will help boost global reserves while providing space for necessary fiscal expenditures to exit the pandemic and enable more sustainable recoveries. Leaders also expressed a willingness to magnify its impact including through voluntarily channeling SDRs and/or budget loans to reach a total global ambition of $100 billion for the most vulnerable countries. In the coming months, I will be exploring with our membership options on how, together, we can get this done.
This was a consequential Summit. The renewed spirit of international cooperation was palpable, with the G7 stepping up its efforts to help the world exit this crisis. I can assure you that the IMF is playing its part.”