HIGHLIGHTS: Kristalina Georgieva

0:01Hi everybody, tune in to this short version of the podcast which we do every Friday. For the long version, tune in on Wednesdays. Hi everyone, I'm Nikolaj Tangen from the Norwegian So-and-Wealth Fund, and today I put on a tie because I'm in really good company with Kristalina Georgieva. Wonderful to be with you. Now, Kristalina is the managing director of IMF, the International Monetary Fund, and you are known for your visionary leadership and the way you have been advocating for really important, bold, long-term reforms. So let's just start with the beginning here. IMF, what is it? Well, the IMF was created towards the end of the Second World War, together with the World Bank, to help countries recover after the war and to put in place institutions that can stabilize the financial system.

0:57Our mandate, macroeconomic and financial stability for growth and employment. We have a membership of 191 countries. In fact, over the last years, we got two new members, small countries, Andorra and Liechtenstein. That's good. And how do you help these companies? What we do for our members is first help them to see the world economy from one vintage point. We have this unique right to collect data from all countries and we do that regularly. so we can take the vital signs of economies, aggregate the picture, and then see what are the trends in the world they should be mindful of. Secondly, when countries are in trouble and they need quickly financing to stabilize their economies, we come true.

2:03We have lending capacity of$1 trillion. We deploy it for countries in crisis. Some are middle-income countries. Some are poor, vulnerable countries. And the third thing we do is we help countries build good institutions, especially monetary authorities, fiscal authorities, data, statistical capacity, so they can see their own economic development with more educated eye. How bad does the crisis need to be before they call you? Well, sometimes they call before a crisis hits. We have also a function to prevent crisis from happening. Sometimes they call when markets close on them. I'll tell you a story of my own country.

3:04I am Bulgarian. In the late 90s, Bulgaria was hit by hyperinflation, over 8 ,000 % inflation, and it caught on the IMF. So what the IMF did for my country was to help us put in place a currency board, which really stabilised the economy and put fiscal discipline. Bulgaria today has 24 % debt to GDP, 3 % deficit, and as of January 1st would be a member of the Eurozone. Was it when IMF bailed out Bulgaria that you decided, you know what, I would love to be in charge of that one day? You know, at that time when the IMF bailed Bulgaria, I was actually at the World Bank. I was already in one of the two Bretton Woods institutions.

4:03Never crossed my mind at that time that we would be sitting with you and I would have been already six years at the helm of the IMF. Let's touch on the world economy because, Kristalina, probably nobody in the world has got better statistics than you about the state of the world. So how do you read the state of the world just now? Better than we feared, worse than it needs to be. We have a world economy that has proven to be remarkably resilient to the multiple shocks that have been hitting us starting with COVID. We are projecting over 3 % growth this year and next. Despite the transformational forces that are hitting us, geopolitics, technology, demography, climate, we have a world that continues to grow.

5:05But first, this growth is too slow to meet the aspirations of people around the world for better lives. When we look back before COVID, the average growth rate was 3.7%. Now it lingers around three. Second, we have a world economy that has not been really fully tested for its resilience. And what I mean is that we don't quite know how these multiple forces of transformation may test it in the future. Now the US is saying that IMF has drifted from its core mission of stability. How do you respond to that? We, one, it is true that we can, we have to be always mindful where we put our resources. And I am very respectful when any of our members, of course, US included, tell us, be careful, you may be venturing into too many directions.

6:22We are a small institution. We are about 4000 people. we are a fairly high performing institution so everybody wants us to do more and different things for them so we have to have the discipline to stay focused and I would say when I look at the delivery from the fund what we are doing for the world that yeah we are doing pretty well. Do you personally have to compromise when it comes to things that you believe in in order to keep the peace? We are a membership organization. I am here to help the members work together, collaborate in a world which is more complex these days. So what I believe, of course, matters, but what matters even more is what my membership needs from us.

7:20And that is my guiding star. You grew up in Bulgaria in the 50s and the 60s and behind the Iron Curtain. And I was just kind of thinking about, you know, armies and things like that. How was your upbringing like? I was very fortunate to be a kid in a loving family, ordinary family. Materially, we had nothing, but we had each other. You say ordinary, you had quite clever parents, right? Well, they were clever, but my mother worked in a shop as a shop assistant. My father was a road technician who was so good that he got promoted to be in a position of an engineer, not party members, in other words, not part of the elite of these days.

8:10But I would be coming home and we lived on the first floor and I would hear my father and my mother singing. We had so much nothing that we didn't have a radio until I think I was in my 20s. So we sang, and that was wonderful. One thing that my parents gave me that I'm forever grateful to them is the encouragement to kind of never give up. I had the ambition to study journalism. That didn't happen because my family was not a party family. But they kind of encouraged me to study political economy and sociology. Sociology was great fun. And they would always say, you know, you can be anything you want to be.

9:03So here I am. Needless to say, my parents were very proud when I graduated from university, when I got my PhD, the first in our extended family with a PhD degree. And, you know, I have only these wonderful memories of growing up materially poor, but emotionally and in terms of education, rich. Thank you.