The IMF and its ‘recipe’ to curb fragmentation and the global crisis

global economic leaders meet this week at Davos under the umbrella of a cluster of crises, such as the war in Ukraine, or the remnants of the covid-19 pandemic, which threaten to further erode global cooperation.

Aware of this situation, Kristalina Georgieva, managing director of the International Monetary Fund (IMF), presented the institution’s formula for to work and contain this situation.

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“How can we confront fragmentation? Adapting a pragmatic approach. Which means focusing on areas where cooperation is essential and delay is not an option. It also means finding new ways to find common goals.“, said georgieva.

Thus, the first recommendation of the organism is to strengthen the global trade system, prevented from decreasing in 2023.

The strengthening of Commerce goes through “vigorous reform of the World Trade Organization and with the conclusion of agreements to open markets based on the principles of the same organization”However, finding this kind of agreement is ‘complex’ given the diversity of members of the bloc and its complex trade relations.

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The executive also asks to be pragmatic in the strengthening of supply chains and improve internal policiesfrom improving social safety nets to investing in job training.

Georgieva also specified that geopolitical fragmentation could make it difficult to help emerging and developing economies that have been harmed by the different conditions macroeconomic.

The organization and other multilaterals, such as the world bankhave been working with borrowers and creditors public and private for “quickly set up a round table world on sovereign debtin which current differences can be discussed.

“These and other pragmatic actions, such as further progress on majority voting provisions on sovereign lending and climate-resilient debt clauses, can help improve debt resolution,” the director pointed out.

In the published documentthe ‘more pragmatic measures must be taken to reduce emissions and curb the use of fossil fuels.

To do so, from organism In the first place, they propose an international minimum price of carbonand on the other hand, climate finance must also be increased to help vulnerable countries to climate change to adapt.

“Innovative use of public balance sheets, such as credit guarantees, equity, and first-loss investments, can help mobilize billions of dollars in private financing. And of course we need better data on climate projects”, Georgieva mentioned in the text.

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