Established in 1944 at the Bretton Woods conference in the US state of New Hampshire, the International Monetary Fund (IMF) plays a crucial role in global financial stability.
Since the COVID pandemic hit the world, the DC-based institution has been called upon more than ever: “unprecedented” assistance has been granted to more than 96 member countries, mostly low-income, says the Director of Communications at the IMF, Julie Kozack.
In a constantly changing global environment, the Fund has adapted to the “changing needs” of its members, she argued in an interview with MAP, while recognizing that much remains to be done.
“The world has had many shocks in the last few years. Our managing director calls it a shock-prone world and the IMF as an institution which aims to help member countries needs to adapt to this world”, she underlined, recalling that when COVID hit the world, the Fund provided rapid financing to help countries to finance health care, vaccines and other things that needed to be done in the midst of COVID.
“Later, we supplemented that with what we call SDR allocation. This was a provision of global liquidity to all of our member countries to help boost their liquidity and their resilience during the pandemic”, she explained.
The IMF official noted that the Fund “continued to adapt over time. But more needs to be done. The world is changing rapidly and we need to adapt as well”, adding that “as we see very strong demand among our lowest income countries for IMF financing and support, we make a call to our stronger members to support us and these countries by filling the resource gap in our special concessional instrument that allows us to lend at zero interest rates to our low income members”.
These kinds of adaptations and reforms need to continue to take place, she said.
In this interview with MAP, Julie Kozack also discusses the IMF inception and explains its missions, the difference in its mandate with the World Bank’s, and details the reforms undertaken to meet a global environment marked in recent years by a streak of crises and an upsurge in geostrategic tensions.
“We are an organization made up of 190 member countries. We come together as a membership and a group of countries to discuss matters of economics and finance. And our mandate is what we call macroeconomic and financial stability. What that means is that we care about growth in our member countries and globally job creation, employment and also stability”, she explained, stating that the aim is to have an economy that grows but also has a low rate of inflation. “We find that stability is important to raise living standards for the people. And that is our ultimate goal to help countries improve the lives of people”.
Compared to the World Bank, Kozack specified that the two Bretton Woods institutions have “different mandates”, but they are complementary.
At the IMF, “we focus on what we call the macro economy: the big picture of the economy, how the whole economy operates. And our mandate is macroeconomic and financial stability”, she said, adding that the focus is “on growth in the economy, employment, and ultimately the idea of raising living standards”.
On the other hand, the World Bank has a complementary role where they are more focused on project financing. They are looking specifically at poverty reduction and development. “So we have very complementary roles. We work very closely together as two sister institutions, and we work in this way together because the only way we can really help our membership is by collaborating and working closely together to serve the needs of the members”.
The IMF focuses on three broad areas. The first is related to policy advice. “Having a membership of 190 countries means that we go to each and every one of these countries. We send a team every year to each country and we do kind of a health check on the economy. How is the economy doing? Where are the strengths? Where are the challenges?”, she underlined.
“And we also bring our global perspective. So we talk to country authorities about the clouds that might be on the horizon coming from global events. We go and we talk to the country, authorities, the government, the central bank, but also members of the private sector, important stakeholders like the youth, university students, women’s groups”.
Kozack added that the IMF has another function, which is called capacity development, noting that the Fund provides “very specific, tailored recommendations at the request of country authorities”, in addition to providing financing and lending to countries.
“If these countries fall on tough times, we would come in and help with a financing package to support that country as it takes some of the measures to restore economic stability”, she indicated.
Regarding the reforms undertaken to improve governance, the Director of Communications at the IMF underlines that in each of these areas, the Fund has “adapted and reformed over the years. “The global economy is changing a lot and the IMF must change as well”, she underlined, saying that on the lending side, the Fund recently created a new instrument to mitigate the effects of climate change, called the Resilience and Sustainability Trust.
Source: Agency Morocaine De Presse