Via IMF (Den Internationale Valutafond)

A New Bretton Woods Moment

By Kristalina Georgieva, IMF Managing Director
Washington, DC

October 15, 2020

1. Introduction:
‘A sisterhood and brotherhood of humanity’

I first want to thank Dr. Ernest Kwamina Addison for his
excellent remarks and contributions as Chairman of the IMF’s Board of

Reflecting on the dramatic change in the world over the last year, I paid a
visit to the Bretton Woods, New Hampshire, where 44 men signed our Articles
of Agreement in 1944. Our founders faced two massive tasks: to deal with
the immediate devastation caused by the War; and to lay the
foundation for a more peaceful and prosperous postwar world.

At the conclusion of the conference John Maynard Keynes
captured the significance of international cooperation as hope for the
world. “If we can continue…The brotherhood of man will have become more
than a phrase”, he said.

As we look forward to welcoming Andorra as our 190th member, the
work of the IMF is testament to the values of cooperation and solidarity on
which a sisterhood and brotherhood of
humanity is built.

Today we face a new Bretton Woods “moment.” A pandemic
that has already cost more than a million lives. An economic calamity that
will make the world economy 4.4 % smaller this year and strip an estimated
$11 trillion of output by next year. And untold human
desperation in the face of huge disruption and rising poverty for the first
time in decades.

Once again, we face two massive tasks: to fight the crisis today— and build a better tomorrow.

We know what action must be taken right now. A durable economic recovery is
only possible if we beat the pandemic. Health measures must remain a
priority—I urge you to support production and distribution of effective
therapies and vaccines to ensure that all countries have access.

I also urge you to continue support for workers and businesses until a
durable exit from the health crisis.

We have seen global fiscal actions of $12 trillion. Major central banks
have expanded balance sheets by $7.5 trillion. These synchronized measures
have prevented the destructive macro-financial feedback we saw in previous

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But almost all countries are still hurting, especially emerging market and
developing economies. And while the global banking system entered the
crisis with high capital and liquidity buffers, there is a weak tail of
banks in many in emerging markets. We must take measures to prevent the
build-up of financial risks over the medium term.

We face what I have called a Long Ascent for the global economy: a
climb that will be difficult, uneven, uncertain—and prone to setbacks.

But it is a climb up. And we will have a chance to address some
persistent problems — low productivity, slow growth, high inequalities, a
looming climate crisis. We can do better than build back the pre-pandemic
world – we can build forward to a world that is more resilient,
sustainable, and inclusive.

We must seize this new Bretton Woods moment.

2. Building Forward: Three Imperatives

How? I see three imperatives:

First, the right
economic policies.

What was true at Bretton Woods remains true today. Prudent macroeconomic
policies and strong institutions are critical for growth, jobs, and
improved living standards.

One size does not fit all—policies must be tailored to individual country
needs. Support remains essential for some time—withdrawing it too early
risks grave and unwarranted economic harm. The stage of the crisis will
determine the appropriate shape of this support, generally broader early on
and more targeted as countries begin to recover.

Strong medium-term frameworks for monetary, fiscal and financial policies,
as well as reforms to boost trade, competitiveness and productivity can
help create confidence for policy action now while building much-needed
resilience for the future.

That includes keeping a careful watch on risks presented by elevated public
debt. We expect 2021 debt levels to go up significantly – to around 125
percent of GDP in advanced economies, 65 percent of GDP in emerging
markets; and 50 percent of GDP in low-income countries.

The Fund is providing debt relief to its poorest members and, with the
World Bank, we support extension by the G20 of the Debt Service Suspension

Beyond this, where debt is unsustainable, it should be restructured without
delay. We should move towards greater debt transparency
and enhanced creditor coordination. I am encouraged by G20
discussions on a Common framework for Sovereign Debt Resolution as
well as on our call for improving the architecture for sovereign debt
resolution, including private sector participation.

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We are there for our member countries—supporting their policies.

policies must be for people
my second imperative.

To reap the full benefits of sound economic policy, we must invest more in people. That means protecting the vulnerable. It also
means boosting human and physical capital to underpin growth and

COVID19 has underscored the importance of strong health

Rising inequality and rapid technological change demand strong education and training systems—to increase opportunity and
reduce disparities.

Accelerating gender equality can be a
global game-changer. For the most unequal countries, closing the gender gap
could increase GDP by an average of 35 percent.

And investing in our young people is investing in
our future. They need access to health and education, and also access to
the internet—because that gives them access to the digital economy
– so critical for growth and development in the future.

Expanding internet access in Sub Saharan Africa by 10
percent of the population could increase real per capita GDP growth by as
much as 4 percentage points.

Digitalization also helps with financial inclusion as a powerful
tool to help overcome poverty.

Just as the pandemic has shown that we can no longer ignore health
precautions, we can no longer afford to ignore climate change—my third imperative.

We focus on climate change because it is macro-critical, posing
profound threats to growth and prosperity. It is also people-critical and planet-critical.

In the last decade, direct damage from climate-related disasters adds up to
around $1.3 trillion. If we don’t like this health crisis,
we will not like the climate crisis one iota.

Our research shows that, with the right mix of green investment and higher
carbon prices, we can steer toward zero emissions by 2050 and help
create millions of new jobs.

We have an historic opportunity to build a greener world—also a
more prosperous and job-rich one. With low interest
rates, the right investments today can yield a quadruple dividend tomorrow: avert future losses,
spur economic gains, save lives and deliver social and environmental
benefits for everyone.

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3. The IMF’s Role

At the Fund, we are working tirelessly to support a durable recovery— and a resilient future as countries adapt to
structural transformations brought on by climate change, digital
acceleration and the rise of the knowledge economy.

Since the pandemic began, we have committed over $100 billion—and we still have substantial resources from our $1 trillion
in lending capacity.

We will continue to pay special attention to the urgent needs of emerging
markets and low-income countries—especially small and fragile states,
helping them to pay doctors and nurses and protect the most vulnerable
people and parts of their economies.

Our unprecedented action was only possible thanks to our members’ generous
support. The doubling of the New Arrangements to Borrow and a new round of
bilateral borrowing arrangements preserves this financial firepower.
Members have also stepped up with essential contributions to our
Catastrophe Containment – and Relief and Poverty Reduction and

This has allowed us to support our low-income members with debt relief and
to triple our concessional lending. We are engaging with members to further
boost our concessional lending capacity adapt our lending toolkit and
increase support for capacity development.

IMF staff, working day and night, have been magnificent in this crisis. My
sincere thanks to them and my Management team.

My deep appreciation also to our Executive Directors – they have been there
every step of the way over the past six months.

4. Conclusion: Seize the Moment

The best memorial we can build to those who have lost their lives in this
crisis is, in the words of Keynes, “that bigger thing”— building a more sustainable and equitable

Our founders did it. It is now our turn. This is our moment!

Now it’s my pleasure to introduce my friend, and great partner to the
IMF: President David Malpass of the World Bank Group.

IMF Communications Department


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