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Annual meetings of the IMF and the World Bank: as economies recover, we need to focus on building a more resilient, inclusive and green future

Date

2021 10 13

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The hybrid annual meeting of the Boards of Governors of the International Monetary Fund (IMF) and the World Bank (WB) will take place on 14-17 October. This year’s meetings focus on discussions on further steps to contain the pandemic, including acceleration of vaccination processes and assistance to developing and emerging market countries, global economic situation and its transformation towards a more inclusive, green and digital economy.

“With the global economic recovery, we must not forget the risks that are particularly linked to the further global evolution of the COVID-19 pandemic. It is important to reduce the escalated gap between developed and developing countries during the pandemic period by ensuring wide availability of vaccines for a resilient recovery. In Lithuania, we combine the pandemic management with structural response to the challenges — the implementation of productivity-enhancing reforms that ensure sustainable economic development. With the help of the Plan "New Generation Lithuania", by investing in digital and green solutions, innovation and research, we aim to transform the national economy and to rise up onto a higher value-added rung", — stressed Minister G. Skaistė.

At the annual meetings, the IMF will present the latest economic forecasts — the IMF predicts that global economy will grow 5.9 % in 2021, and the growth should reach 4.9 % in 2022, while the euro area economy will grow by 5.0 % in 2021 and 4.3 % in 2022. According to the IMF, Lithuania’s economy will grow 4.7 % in 2021, and the growth of 4.1 % is projected for 2022. Lithuania’s economy is projected to grow 4.3 % in 2021 and 4.0 % in 2022 according to the forecasts of the Ministry of Finance made in September.

The IMF underlines that while global recovery continues, the situation remains uncertain due to the further pandemic, while the gap between advanced and low-income and developing countries caused by COVID-19 is increasing. The IMF calls on countries not to interrupt fiscal and monetary support prematurely and to target temporary fiscal measures aimed at the affected sectors. As the pandemic shock recedes and economies return to growth, it is necessary to ensure the sustainability of public finances in the medium-long term. Given that the world is also facing climate change challenges and significant digital changes, particular attention has to be paid to building a more resilient, inclusive and green future and implementing long-term structural changes.

The international financial institutions — the IMF and the WB — play a significant role in the face of the pandemic in assisting the most affected countries, in particular low-income and developing economies. In the wake of the pandemic, the WB approved a package of assistance to developing countries and pledged USD 160 billion in preferential support and financing, also approved a USD 12 billion package for the purchase and distribution of COVID-19 vaccines in developing countries. Meanwhile, during the pandemic, the IMF provided preferential financing to 87 countries amounting to about USD 117 billion.

In addition, in August this year, the IMF, taking into account the long-term need for global buffers and to support the recovery from the COVID-19 crisis, allocated the Special Drawing Rights (SDR) to Member States in the amount of USD 650 billion. The IMF calls on financially stronger countries, including also Lithuania, to direct their available SDR to developing and poor countries to accelerate their recovery and the fight against long-term structural challenges.

Lithuania, strengthening its participation in the IMF activities and fulfilling its assumed international commitments to increase assistance to development, has responded to the IMF’s call to Member States to assist low-income and developing countries in the face of a pandemic shock and is planning to provide a subsidy of approximately EUR 2.4 million to the IMF Poverty Reduction and Growth Trust (PRGT) over the period 2021-2022. The Poverty Reduction and Growth Trust is an essential IMF lending instrument in issuing soft loans to the to the world’s poorest countries.

“By deepening Lithuania’s involvement in the IMF activities and strengthening our country’s voice in this international financial institution, we contribute to the efforts of the Poverty Reduction and Growth Trust to help the most affected low-income and developing economies in the face of the pandemic. Health and growth prospects of the global economy depend to a large extent on ensuring a resilient recovery in all groups of countries — this is the interest of the international community as a whole, and at the same time of Lithuania,” said Ms G. Skaistė.

At the meeting of the WB Development Committee the discussions will focus on the WB’s role in strengthening the countries’ preparedness for possible future health, climate and other emergencies. The importance of assessing the lessons learnt from this pandemic and of providing tools for crisis prevention, preparedness and rapid response is underlined. Climate change has the potential to increase the frequency and severity of natural disasters, therefore the ways must be sought to increase the funds allocated to this area. The WB is making significant efforts on climate change and helps developing countries to focus domestic resources, mobilise private capital and make efficient use of public finances.

In the context of the IMF and WB annual meetings, the participation of the Minister of Finance is also foreseen in the panel discussion “Whether the Time Has Come to Policy Overload to Promote the Recovery of a More Resilient World Economy” at the Forum on the World Economic Recovery — New Risks, Barriers and Opportunities organised by the Financial Times and Citi Bank. During the panel discussion, the Minister of Finance together with Mr François Villeroy de Galhau, Governor of the Central Bank of France, and Mr Martin Wolf, chief economics commentator at the Financial Times, will discuss about policy measures to foster a faster global economic recovery and discuss possible risks, including inflation.

The IMF and WB annual meetings will also include traditional meetings of the IMF and the WB Nordic-Baltic Group, the Plenary Session of the WB Board of Governors, the meeting of the IMF International Monetary and Financial Committee, the WB Development Committee meeting, the meeting of the IMF Central, Eastern and South-Eastern Europe region finance ministers and central bank governors, the 6th meeting of the Coalition of Finance Ministers for Climate Action and other events.

You can follow the IMF and WB Spring Meetings here: https://meetings.imf.org/en/2021/Annual

https://www.worldbank.org/en/meetings/splash/annual

IMF economic forecasts: https://www.imf.org/en/Publications/WEO/Issues/2021/10/12/world-economic-outlook-october-2021.

Additional information:

Lithuania has been a member of the IMF and WB since 1992. The IMF objective is to ensure financial stability, while the WB objective is to reduce global poverty.

Our country is represented by the Minister of Finance (Ms G. Skaistė is the Governor of the WB and Alternate Governor of the IMF), the IMF — by the Governor of the Central Bank.

The World Bank consists of 5 organisations: International Bank for Reconstruction and Development, International Development Association, International Finance Corporation, Multilateral Investment Insurance Agency and International Centre for the Settlement of Investment Disputes.