Kristalina Georgieva, who has just started her second five-year term as the International Monetary Fund's managing director, spoke ahead of the Fund and the World Bank's annual gathering of financial leaders in Washington next week.
She used a speech in the US capital to celebrate the progress made on tackling inflation -- while warning of the dangers ahead for the global economy.
"The big global inflation wave is in retreat," she said, noting that "a combination of resolute monetary policy action, easing supply chain constraints, and moderating food and energy prices is guiding us back in the direction of price stability."
"And this has been done without tipping the global economy into recession and largescale job losses," she added.
But while the inflation rate is falling, "the higher price level that we feel in our wallets is here to stay," she said, adding that higher prices were hitting the world's poorest economies and individuals the hardest.
Georgieva also confirmed that a new third chair for Africa on the IMF's executive board would be held by Ivory Coast.
Her speech comes just a few days before the IMF and World Bank's annual meetings get underway in Washington against the backdrop of growing conflict in the Middle East, and shortly before the US presidential election, in which the Republican former president Donald Trump is running against Democratic vice president Kamala Harris.
Trump has repeatedly threatened to hike tariffs, while also suggesting the president of the United States should have a greater say over monetary policy -- a task currently reserved for the Federal Reserve, the independent US central bank.
In her speech, Georgieva praised the independence of central banks around the world, along with international financial institutions like the IMF, which provided financial support during the Covid-19 pandemic.
But she warned that the world is facing "a difficult geopolitical environment," with the expanding conflict in the Middle East adding to the challenges facing policymakers looking to tackle an "unforgiving combination" of lackluster global growth and high levels of public debt.
"We live in deeply troubled times," she said, warning that the peace dividend from the end of the Cold War "is increasingly at risk."
"In a world of more wars and more insecurity, defense expenditures may well keep rising while aid budgets fall further behind the growing needs of developing countries," she added.
"We must not allow this reality to become an excuse to do nothing to prevent a further fracturing of the global economy," she added.
World Bank president focused on job creation ahead of annual meetings
Washington (AFP) Oct 18, 2024 - The World Bank will unveil plans to tackle job creation, gender disparities, and food security at next week's gathering of the world's finance ministers and central bankers in Washington, its president said in an interview.
Ajay Banga spoke to AFP at the development lender's headquarters in Washington ahead of the Annual Meetings of the International Monetary Fund and the World Bank Group, which begin on Monday.
16 months into his term running the 80-year-old institution, the former Mastercard chief executive said he had made significant progress on his plans to create "a better bank and a bigger bank," and was now focusing on job creation as a key World Bank objective.
"1.2 billion young people in the emerging markets will become eligible for a job over the coming 12 to 15 years," he said. "The same countries are currently forecast to generate a little north of 400 million jobs. That's a big gap."
"If you don't give them clean air, clean water, healthcare and education when they're growing up, and a job when they're ready, then you end up with social challenges, migration, social circumstances, an unhealthy population," he said.
"So we've got to find ways to attack this issue with some urgency," he added.
To that end the World Bank has created an advisory council on jobs, led by Singaporean President Tharman Shanmugaratnam and the former Chilean president Michelle Bachelet, which will meet for the first time in Washington on Wednesday.
The question they will seek to answer, Banga said, is: "How do we translate all that with the right regulatory policy to get jobs on the ground in these countries?"
Of those 1.2 billion young people, at least one third will be in Africa, making job creation on the continent a priority, he added.
The World Bank also plans to announce new goals to tackle global gender disparities and to boost agribusiness to tackle food security.
- 'Wet paint' -
One of Banga's key objectives since taking office has been to look for ways to boost the role of the private sector in international development.
The World Bank previously estimated that developing countries will need an average of $2.4 trillion each year between now and 2030 in order to address the challenges posed by climate change, conflict, and pandemics -- significantly above the Bank's current annual commitments.
To do so, the bank set up a private sector "investment lab" last year with the CEOs of major private sector firms, which has now come back with a number of recommendations.
These include providing regulatory and policy clarity, tackling foreign exchange risk, providing better political risk guarantees, shouldering some of the risk of investing in developing economies, and packaging loans together to create a new "asset class," Banga said.
For this last recommendation, Banga has tapped S&P Global CEO Doug Peterson to lead a working group to say: "What needs to change for us to get to scale, size and replicable, standardized loans of large enough numbers that you can bring fairly large sums of money to work in this process?"
But he cautioned that many of these plans were still in their infancy.
"All of these are wet paint," he said. "This takes time."
- Gaza reconstruction -
Amid Israel's ongoing campaign against Hamas in Gaza, Banga said the World Bank board had voted recently to increase its assistance to the Palestinian Authority for use in Gaza to $300 million, six times the figure for the previous year.
Israel has been at war with Hamas since the October 7 attack, which resulted in the deaths of 1,206 people, mostly civilians, according to an AFP tally of official Israeli figures.
Israel's retaliatory campaign in Gaza has killed 42,438 people, the majority civilians, according to data from the health ministry in the Hamas-run territory, which the UN considers reliable.
The World Bank now estimates the cost of reconstruction in Gaza at more than $14 billion, Banga said, adding that the bank had formed a group composed of Palestinians, Israelis, Jordanians, Egyptians, the European Union and the United States, to look at how to rebuild after the war ends.
"There are a number of Middle Eastern countries -- Saudi Arabia, for example -- who are very interested in contributing to this thinking, because they see that redoing this the right way is the best, longer-term solution for economic growth there," he said.
"So I think we'll get more partners on board over the coming month or two," he added.
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