Economic Recovery: Full Conversation with David Malpass, Kristalina Georgieva, and Janet Yellen

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Economic Recovery: Full Conversation with David Malpass, Kristalina Georgieva, and Janet Yellen

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The lingering pandemic has dealt the global economy an unprecedented shock, and the recovery is likely to be slow and uneven. Disadvantages and inequalities have been amplified, with harm falling hardest on poorer people, firms, and countries which face obstacles to financial resources and networks. What is needed to support a faster and deeper economic recovery that lays a foundation for a more sustainable and inclusive global economic system?  

This event will focus on economic recovery through three broad lenses: 

  • Sustainability: How can we make this a green recovery and rebuild economic systems to better use resources and create a climate-friendly future? 

  • Resilience and Innovation: How can firms reinvent themselves to create more jobs, and how can governments find new ways to transform the crisis into an opportunity for growth? How can youth avoid the risk of a “lost generation”? 

  • Inclusion: How can policy makers ensure that everyone benefits from the recovery and inequality is not worsened? This includes attention to the ways the pandemic has disproportionately affected women and girls. 


Read the official transcript.

Speakers

Read the transcript


  • 0:04 It's a pleasure to be here with IMF  Managing Director Kristalina Georgieva  
  • 0:09 and with U.S. Treasury Secretary Janet Yellen  to discuss the economic recovery in the kickoff  
  • 0:15 of our Spring Meetings. The world faces major  challenges, including COVID, climate change,  
  • 0:22 rising poverty and inequality and growing  fragility and violence in many countries.  
  • 0:29 The inequality is most apparent in the direct  effects of COVID that hits informal workers  
  • 0:35 and the vulnerable the most. The inequality  extends well beyond that to vaccinations,  
  • 0:42 the concentration in wealth, the unequal impact  of the fiscal stimulus and asset purchases, and  
  • 0:49 the imbalance in debtor-creditor relationships,  particularly for people in the poorest countries. 
  • 0:55 The World Bank Group is leaning forward as much as  possible to face these challenges. In response to  
  • 1:02 COVID-19, we took broad, fast action and quickly  achieved over 100 active operations of support  
  • 1:09 for developing countries. Commitments  rose 65% in 2020 from 2019. On vaccines,  
  • 1:17 working closely with Gavi, WHO, and UNICEF,  we've conducted over 100 capacity assessments,  
  • 1:25 many even more before vaccines were available. We  are now passing several specific country vaccine  
  • 1:32 financing operations each week through our Board  with already 10 approved, 10 more scheduled in  
  • 1:38 April, and around 30 more expected in May and June  for a total of around $4 billion in 50 countries.  
  • 1:46 There are major challenges for the countries in  securing deliveries, from COVAX and manufacturers,  
  • 1:54 and we're working to support their efforts. Many  developing countries entered the pandemic with  
  • 2:00 unsustainable debt levels. We've worked to  achieve a debt service suspension initiative  
  • 2:06 and increased transparency in debt contracts. Both  steps are helping. We've dramatically increased  
  • 2:13 our grants and loans to the DSSI countries. Our goal is to maximize resources available to  
  • 2:20 people, and we're working in close collaboration  with the IMF, to support the G-20’s implementation  
  • 2:29 of the common framework we're pushing forward  together on Chad, and the World Bank hopes to  
  • 2:35 be able to put in substantial fast-disbursing  resources. Chad has a heavy burden of  
  • 2:41 collateralized debt owed to a very narrow group of  creditors presenting specific challenges. Finally,  
  • 2:49 we're finalizing a new climate change action  plan, which includes a big step up in financing,  
  • 2:56 building on our record climate financing over the  past two years. It includes new analytical support  
  • 3:03 to countries as part of integrated climate and  development programs. We want to achieve as much  
  • 3:10 impact as possible with the increased financing.  Our plan identifies key priorities for action,  
  • 3:16 with a focus on both adaptation and mitigation.  It also includes a strong focus on a just  
  • 3:24 transition from coal, and we're working toward  aligning our financial flows with the objectives  
  • 3:30 of the Paris agreement. To conclude, I've  noted big challenges. We're working to bring  
  • 3:37 all together to achieve what we call GRID: green,  resilient, and inclusive development. We'll  
  • 3:44 have separate events on debt tomorrow, climate  transitions on Thursday, and vaccines on Friday.  
  • 3:52 And now, let me turn to Secretary Yellen –  I'm so pleased you're here. Thank you very  
  • 3:57 much for that. Dr. Yellen, it's been a year since  we were on a presentation together. The world had  
  • 4:06 a very hard year, and the United States under  your leadership is having a big impact. Could  
  • 4:13 you go through what the U.S. Is doing to help  the world recover economically from the crisis? 
  • 4:19 Well, thanks so much, David. It's a pleasure to be  with you. Well, first of all, domestically, we're  
  • 4:26 focusing on the pandemic and trying to promote  vaccinations, testing, contact tracing to get  
  • 4:36 it under control, because we recognize that for  the United States and for the world as a whole,  
  • 4:42 the pandemic really is what's going to call  the shots in terms of how the economy does. So  
  • 4:49 that's first and foremost at home, and I think  it's equally important for the entire globe.  
  • 4:58 We are trying to support the most vulnerable  people, who typically are low-income people  
  • 5:06 and minorities in the United States. And the same  is true globally, I think. Those who work in the  
  • 5:14 service sector and minorities, vulnerable people,  have been most impacted both healthwise and in  
  • 5:25 terms of the economic impact. So, we have  many programs that are supporting them. 
  • 5:32 Unemployment insurance programs are relief,  for rental assistance, homelessness,  
  • 5:42 support for families that are burdened with women  who are out of the workforce because children  
  • 5:49 can't go to school, trying to reopen schools as  promptly as we can and support state and local  
  • 5:57 governments. We've decided to go big, because we  think that the risks are of severe scarring if  
  • 6:08 we allow there to be long-term unemployment  and we're projecting a pretty rapid as the,  
  • 6:16 we deal with the pandemic. We're  expecting a rapid recovery. I'm hopeful,  
  • 6:20 we'll be back to full employment next year.  And once we are, we're going to turn to a  
  • 6:26 longer-term agenda of investment: investment in  infrastructure, in R&D, in people. But globally,  
  • 6:34 I think that what we're doing domestically  is helpful to the entire global community,  
  • 6:42 stronger growth in the U.S. Is going to spill over  positively, to the entire global outlook. And we  
  • 6:52 are going to be careful to learn the lessons of  the financial crisis, which is, don't withdraw  
  • 6:59 support too quickly. And we would encourage all  those developed countries that have the capacity,  
  • 7:06 using fiscal policy and monetary policy to  continue to support a global recovery for the  
  • 7:14 sake of the growth in the entire global economy. Kristalina, Managing Director Georgieva,  
  • 7:21 you have been in the forefront of worry about the  inequality in the system. I wonder if you could  
  • 7:28 give us some thoughts on that and what  can the IMF do to ease the inequality. 
  • 7:50 D td it is so important for the reasons both  of you outlined that, that it is a focus,  
  • 9:01 because if we don't do it, then we  risk inequalities to deepen and to  
  • 9:08 hold societies and to hold growth back.  What does it mean for us at the IMF?  
  • 9:16 First and foremost, we have stepped up  significantly the provision of financial lifelines  
  • 9:26 to vulnerable countries, emerging markets with  weak fundamentals, low-income countries. We are  
  • 9:34 joining you, the World Bank in making sure that  those with limited fiscal space, no access to  
  • 9:43 markets, are not left out from the recovery. We  have done dramatically more. Just to give you  
  • 9:51 one number, 13 times more lending to low-income  countries than we would do in an average year.  
  • 9:59 And we are committed to continue to  support them through the recovery.  
  • 10:05 More importantly, we have included  in virtually almost all our programs,  
  • 10:13 quantitative targets for social spending, to  make sure that especially spending for education  
  • 10:21 and health and social protection is in place. But also, that attention is being given to the  
  • 10:29 empowerment of women —they're getting now the  short end of the stick in this crisis — and  
  • 10:35 that we target support to the most vulnerable  parts of the economy and the most vulnerable  
  • 10:41 people. Going forward and working with you,  working with our shareholders, what we want to see  
  • 10:47 is a comprehensive program of support. You spoke  about that: We cannot ignore debt sustainability  
  • 10:55 in this crisis, provision of more concessionary  resources and also seeking ways in which we can  
  • 11:02 boost reserves, especially for countries with  no market access. So ultimately this fair shot  
  • 11:10 would bring the world together  because in this crisis, we have no way  
  • 11:15 to get through without pulling together. Yeah, this is huge. A fair shot. Dr. Yellen,  
  • 11:24 Madam Secretary, you interact with the advanced  economies a lot. What can everyone do working  
  • 11:34 together to achieve an inclusive recovery?  How do we make progress on those tough issues? 
  • 11:42 Well, let me second a number of the points  that Kristalina just made. I think it's the  
  • 11:44 responsibility of the developed countries  to make sure that decades of progress in  
  • 11:56 fighting poverty globally and trying to  close income gaps between rich and poor  
  • 12:02 countries — we need to see that that progress is  not reversed because of the pandemic. And I hope,  
  • 12:11 as we gather together for the spring meetings,  that's going to be our focus. We need to  
  • 12:19 provide a package of resources  that your organizations can use to  
  • 12:26 help developing countries, low-income countries. I  hope that we'll make progress on approving an SDR  
  • 12:35 allocation, which I think would be a very  important way to support the reserve needs  
  • 12:43 globally, especially of low-income countries.  You mentioned tackling debt. I think that's  
  • 12:50 an extremely important initiative,  concessional finance for the poorest countries.  
  • 12:58 You know, I hope that this will be the focus  and the developed countries will band together  
  • 13:06 to make sure that we provide that support. Yeah, absolutely. I liked very much the  
  • 13:11 way you said that as the U.S. Expands,  that has benefits for everyone. We can  
  • 13:16 extend that as Europe expands, that has benefits –  and the developing world, I think really welcomes  
  • 13:24 that growth coming out of the advanced economies  as it can be achieved. I was very happy to hear  
  • 13:30 Kristalina say an upgrade in the IMF forecast for  that. I want to turn a little bit if we may to  
  • 13:36 climate change. These are immense issues for the  whole world, and so each of us in our various ways  
  • 13:44 are interacting. I went through our climate change  action plan that we're, that we're just releasing,  
  • 13:52 but I wonder for the IMF, how do you think about  the climate change issues in the context of the  
  • 13:57 macro economic challenges that you work  on and how can the IMF help on this area? 
  • 14:03 Climate risks are a growing threat to  macroeconomic and to financial stability.  
  • 14:11 And with the same token climate action offers  the prospects for green growth and green jobs,  
  • 14:19 critical for what we do at the IMF  in supporting growth and employment.  
  • 14:27 What we have embraced, as a latecomer  in this conversation, is to zero in on  
  • 14:34 our comparative strengths. What is it that we are  uniquely positioned to help the world accelerate  
  • 14:41 the transition to the new climate economy?  And it is macroeconomic data and research,  
  • 14:47 fiscal and monetary policies, crisis prevention,  crisis response. So, what we are doing at the IMF,  
  • 14:57 working very closely with the World Bank and  other organizations, are four areas of stepping up  
  • 15:05 our work, so, it is at the heart of what we do.  First: policy advice, we engage with all countries  
  • 15:14 in what is known as Article 4 consultations.  And when we do so, we look at the criticality  
  • 15:22 of mitigation and adaptation policies. Naturally,  we do more on mitigation in countries that are  
  • 15:30 high emitters. We do more on adaptation in  countries that are more vulnerable. For example,  
  • 15:36 countries like China, U.K., there we look  primarily at carbon intensity, what can  
  • 15:44 be done with good policies. When we go to the  Caribbean, naturally, we focus on vulnerability  
  • 15:50 and adaptation, or Sub-Saharan Africa for  that matter. Secondly, we are zeroing in on  
  • 15:57 climate-related financial stability risks, and we  have a big role to play: standardized reporting  
  • 16:04 of this risks, stress testing, and looking at  the role of supervisory authorities. We have  
  • 16:11 an instrument together with the World Bank, the  financial sector assessments. We are integrating  
  • 16:18 climate-related risks in these assessments. Third,  data. Data tells a story to finance ministers  
  • 16:28 like nothing else. Integrating carbon intensity  and other climate data in quarterly macroeconomic  
  • 16:36 data is what we are pursuing, again working with  other organizations. So, we are going to have  
  • 16:42 a dashboard that would help policymakers  to see in one place, their growth numbers,  
  • 16:48 employment numbers, carbon intensity numbers.  Last but not least, David, capacity development.  
  • 16:55 Countries need to speed up their ability  to integrate climate policies in their  
  • 17:02 macroeconomic policies. And we are there for them. Fabulous. Janet, President Biden has talked about  
  • 17:10 the whole-of-economy approach. And you've noted  that poor countries often are not the ones  
  • 17:16 emitting the greenhouse gases, or not in such  quantities. We have this challenge that Kristalina  
  • 17:24 is talking about of the diagnostics being applied.  Where are the areas that we can have most effect?  
  • 17:34 I wonder your thoughts on how does the world  better invest in this problem and solving it? 
  • 17:41 So, obviously climate change is a global  problem, and we're not going to really be able to  
  • 17:51 deal with greenhouse gas emissions successfully  unless countries like the United States act  
  • 17:59 domestically and then foster the transfer of  resources in the financing that’s necessary  
  • 18:08 for developing countries to be able to do  so successfully. President Biden is very  
  • 18:16 focused on the U.S. Climate agenda. He’S going  to be proposing a package of infrastructure and  
  • 18:25 climate change investments to make sure that  we make our own domestic contribution to  
  • 18:33 meeting the Paris objectives. And we look to you  and working with you, in order to make sure that  
  • 18:42 the necessary resources for green development  and finance are transferred to the developing  
  • 18:51 countries that really need those resources.  And I think both of your organizations have  
  • 18:59 very important roles to play, maybe distinct  roles to play as Kristalina was mentioning, but,  
  • 19:07 you know, we need to make sure that we help  developing countries meet their climate goals  
  • 19:14 along with their development objectives. And the  availability of green finance is critical to that. 
  • 19:23 This, you know, as we're putting  out our climate change action plan,  
  • 19:28 one of the key things we're trying to do right  now this month is work with countries in DC, on  
  • 19:33 their nationally determined contributions in  their participation in the Paris agreement.  
  • 19:43 And one of the challenges in that is how do you  maximize the results for the country within their  
  • 19:50 resources, within the world's resources.  That goes right back to the diagnostics  
  • 19:56 area. What do have measurement on?  How do we bring in adaptation for the  
  • 20:02 poorest countries? It turns out the biggest  thing that they need is the adaptation side  
  • 20:08 this brings us all to, and let's both, let's  all discuss the importance of in the end,  
  • 20:13 the private sector has to be fully engaged in this  effort as well. So that involves the financial  
  • 20:20 side, the financial intermediaries and the risks  measurement of the risks that are in. I think also  
  • 20:26 just the big dollar investments that are needed in  cleaner sources of energy. One of the things we're  
  • 20:33 trying to do World Bank is on the electricity  side, that more access for people, but in a way  
  • 20:38 that's greener, and so that's a big challenge  from a dollars and cents standpoint. Kristalina  
  • 20:45 thoughts on private sector and investment flows? Well, the way we think about it at the Fund  
  • 20:51 is that there has to be a framework that credibly  directs private sector over medium/long term.  
  • 21:00 And the way that can be done is first to  provide forward guidance on carbon price.  
  • 21:08 At the Fund, we concluded that, what is today $2  a ton is multiple times lower than where carbon  
  • 21:19 price should be — at least $75 a ton.  But we can't go from here to here in one  
  • 21:26 jump. So, giving that predictable forward  guidance helps the private sector to then  
  • 21:32 integrate reduction of carbon intensity in their  own investment decisions. Secondly, there is a  
  • 21:39 big role for the public sector to make it easier  for the private sector to take the green turn.  
  • 21:47 And it is green infrastructure push. I'm thrilled  that United States is intending to pursue it.  
  • 21:55 We calculated that over 15 years, a green  investment push in a modest amount can generate  
  • 22:06 0.7% boost to growth, create many green jobs. But  also what it does is it makes it possible for the  
  • 22:16 private sector to find its way. Just imagine if we  have electric charging stations easily accessible  
  • 22:24 everywhere, the shift to green mobility  is going to be much faster. And the third,  
  • 22:31 and this is hugely important, private sector  would step up when green finance is well  
  • 22:41 underpinned exactly with what I was talking about.  Reporting on climate-related financial stability  
  • 22:50 risks, creating conditions for boosting  green bonds, because the private sector can  
  • 22:58 see good accounting for impact. And this is  where the bank is so fantastic by providing  
  • 23:06 that ability to capture the meaning of greening.  You said something very important, David, before  
  • 23:15 and it is a just transition. We are not going  to win if there are losers unattended. If people  
  • 23:26 in high carbon intensity sectors or regions do  not get a helping hand, and we should not expect  
  • 23:36 the private sector to solve this out entirely on  its own. So again, it's very exciting to see that  
  • 23:45 a country with so much clout internationally  is taking on the leadership in that regard. 
  • 23:52 That's fabulous. We have the benefit here in the  World Bank of having two eminent economists in  
  • 23:59 fields, labor, and climate and environment, which  is fabulous. And it puts together as we think  
  • 24:05 about their just transition. A lot of countries  have coal miners that are dependent on coal,  
  • 24:13 and yet the world knows that there needs to be  a way to a better future on that. And so, one of  
  • 24:20 the things the World Bank can bring into that is  in the nature of labor economics, incentives to  
  • 24:29 help people move to new things. Are there others?  What are your thoughts? How does the world make  
  • 24:35 this transition and what are the investments?  What are the labor force implications of this? 
  • 24:42 So let me again echo my agreement with  many of the points that Kristalina made.  
  • 24:49 I think, to really make progress on  climate we need both public investment  
  • 24:56 and private investments and things like  charging stations, and an electrical grid that's  
  • 25:04 capable of handling renewable energy sources  appropriately. These core investments are  
  • 25:13 critical in order to provide the infrastructure,  the public infrastructure to support private  
  • 25:20 investments incentives. We're also looking at  tax incentives to stimulate private R&D. I think  
  • 25:30 technological change will be important and  we want to incentive in a green direction.  
  • 25:37 We see the potential for tax incentives for  electric vehicles and the like, these are some  
  • 25:46 ways in which we hope to stimulate private sector  investments, and there will be opportunities.  
  • 25:53 You know, we sometimes think this as something  that's costly, but it's really important to  
  • 25:58 emphasize that addressing climate change is going  to bring opportunities to the private sector  
  • 26:05 for investment and for our society. As  a whole, you asked about labor markets,  
  • 26:13 that's going to bring good jobs. And I  believe that some work by the IMF shows that  
  • 26:21 green investment tends to stimulate more jobs.  It's more labor intensive than other forms of  
  • 26:29 investment. So, there are opportunities here. And  let me also echo my agreement about information.  
  • 26:40 It's very important. There's a huge and growing  interest in sustainable investing among financial  
  • 26:48 institutions and investors around the world for  that to be possible, they need information about  
  • 26:56 companies and their exposure to climate risks.  There's a global movement to try to provide  
  • 27:05 consistent information that can be the basis  for investment decisions. We're going to look  
  • 27:11 carefully at that in the United States, to try to  promote that. And of course, examination of risks,  
  • 27:19 the type of scenario analysis, making sure  that financial institutions understand  
  • 27:26 the risks of climate change, due both to physical,  environmental changes that will be caused by  
  • 27:36 climate change, but also because of the potential  for changes in asset prices or stranded assets. So  
  • 27:44 those are some planks of the work we would  like to see both domestically and globally. 
  • 27:50 One of the interesting questions in this  area are core economic questions, which are  
  • 27:56 how do you incentivize? How do you price on some  of the issues? How do you do that efficiently  
  • 28:04 on a global basis when people have different  policies? I think one of the things we're trying  
  • 28:11 to do in our own work is to think about the core  economic challenges. What's the most effective  
  • 28:21 way to stretch the resources that are  available to deal with the problems? One of the  
  • 28:30 challenges has been, some chunk of greenhouse  gas emissions comes from the agriculture sector.  
  • 28:38 Yet agriculture is critical to food production and  to labor. So how do we put all of those together?  
  • 28:46 I know we're running toward the end of our  conversation. Are there other topics that  
  • 28:55 you want to raise? I'll turn to Kristalina. Well, the importance of us working together.  
  • 29:04 We are in the Spring Meetings, it brings the  world to concentrate on what we can achieve  
  • 29:12 faster and more efficiently by working together.  I want to say two things. One, we are not giving  
  • 29:21 enough credit to collaboration that has already  taken place. In this crisis Central Banks and  
  • 29:30 finance authorities have stepped up swiftly in a  coordinated manner. We just calculated at the IMF,  
  • 29:38 that if that didn't happen on this scale, and in  that degree of coordination, the recession would  
  • 29:46 have been three times deeper. In other words,  we would have been lingering into a depression.  
  • 29:54 And that value of bringing everybody together  cannot be overstated. And my second point is  
  • 30:04 to take at least one cheer for our scientists that  have delivered vaccines in a record short time. We  
  • 30:16 owe it to them to make sure that everybody  gets an access to vaccine. There is no more  
  • 30:24 important economic policy today than doing exactly  that. So, let's use our coming together for  
  • 30:35 building up the foundation of  strong international cooperation  
  • 30:41 for what you started from David: green,  smart, inclusive future for all of us. 
  • 30:51 Yeah, that's huge. Both the cooperation  side and the technology side, and the  
  • 30:56 careful use of technology to make the advances.  And we could've spent the whole conversation  
  • 31:02 on vaccines, I'm sure. Janet, closing? I would simply say, I think resilience is  
  • 31:09 important. And to me, one of the lessons  of the crisis is that the global system  
  • 31:18 you know, should've learned that we  need to be better prepared for crises  
  • 31:23 than we were for this one. This may not  be our very last health crisis ever,  
  • 31:30 and I hope we will learn that we need to work  together to be better prepared for future crises.  
  • 31:39 We've seen, certainly we in the United States have  seen that our safety net wasn't all that it should  
  • 31:48 be to protect the most vulnerable citizens.  We have had to shore it up in a series of ad  
  • 31:55 hoc actions. And I think making sure that our  safety nets work here and throughout the world,  
  • 32:05 for future crises. Global supply chains —we saw  weaknesses and problems in global supply chains.  
  • 32:15 I think we had very efficient supply chains,  but not very resilient supply chains. And  
  • 32:23 that's an area that I think we should be trying to  shore up. And finally, I'd say we did a lot after  
  • 32:31 the financial crisis in 2008 and 2009 to shore  up the resilience of our core banking system.  
  • 32:40 And we should appreciate that we did not  have a banking crisis. Our banking systems  
  • 32:47 were able to support growth in credit. But  some areas outside the core banking system  
  • 32:55 of non-bank financial intermediation showed  tremendous stress. So, I think we have  
  • 33:01 more work to do to have a more resilient  financial system. And in all these areas,  
  • 33:08 again, globally, we need to work together to  cooperate as in climate change to make progress. 
  • 33:16 That's a great conclusion. Let's leave it  there with resilience and the preparation  
  • 33:21 for being stronger on the recovery and in the  next global expansion. Well fingers crossed.  
  • 33:30 There's lots of work to be done, but that's a  great conclusion. Thank you. Thanks to you both.

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Economic Recovery: Toward a Green, Resilient, and Inclusive Future

As countries rebuild their economies after COVID-19, it is fundamental that they see this as a unique opportunity to lay the foundation for a green, resilient, and inclusive future. These efforts were the theme of the event kicking off the Spring Meetings on Tuesday, Economic Recovery: Toward a Green, Resilient, and Inclusive Future.

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