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The director of the International Monetary Fund, Kristalina Georgieva, said that the global recession that has been talked about in recent months can be avoided if the fiscal policies of countries are consistent with monetary policies. However, she added that it is inevitable that some countries will fall into recession in 2023.
The director of the international lender called on global governments to be consistent in tightening monetary policies to avoid a global recession during a meeting in Riyadh, Saudi Arabia.
Today marked an important milestone in the IMF’s partnership with Saudi Arabia and the region.@MOFKSA HE Minister Al-Jadaan & I signed an MOU establishing an IMF regional office in Riyadh, taking our engagement with country authorities and regional institutions to a new level. pic.twitter.com/mjxHNACEWt
— Kristalina Georgieva (@KGeorgieva) October 3, 2022
“We need central banks to act decisively. Because, because inflation is so stubborn, we now see a secondary impact of food and energy prices on core inflation in many countries, and if it doesn’t stop at its steps, it’s bad for growth and it’s very bad for the poor. Inflation is a tax on the poor,” Georgieva said.
According to Georgieva, the recent fiscal policies that some countries are implementing go against the purposes of monetary policies, since they grant subsidies indiscriminately and harm those most in need.
But, in line with what the UN proposed, he recommended a new strategy, including corporate taxes on big profits, supply-side efforts and regulation of commodity speculation.
“We are likely to see an unemployment hit, an increase in unemployment and that will be the time for the Fed to say we’ve done our job. We can relax going forward but we’re not there yet.”
The IMF director also referred to the Federal Reserve and its recent increases in interest rates to cool down the US economy. She asked the US central bank to be “extremely prudent in its policies” and recalled that the decisions made by the FED affect the global market.
With Reuters and local media.
