With increasing calls from developing and emerging countries to have more say in international institutions – with greater quotas for nations such as China and India – in addition to concerns about widening wealth inequalities, Ms Georgieva is among the global leaders on whose shoulders change rests.
That is a responsibility the economist acknowledges. She believes that with the pace of change in the world, particularly the speed of technological development and speed of information, “we have to recognise that [the world] requires adapting the economy to this more open and inclusive world”.
In an interview with The National, Ms Georgieva explained how she views this adaptation.
“I very strongly believe in markets, but markets are not perfect,” she said. “Markets without regulation may deliver for some and not for others.”
She warned that “without regulation, they may accelerate climate change, rather than bring a chance for the world to prevent an existential crisis”.
Embarking on reforming markets is not an easy feat, and Ms Georgieva believes “reforming markets means two things, first internalise externalities, make people pay the full price for what they consume … we have to have an economy in which we know the full cost of what we consume”.
As for the second element, it requires “more fairness … people are against globalisation to a great degree because globalisation delivered good results but not for everybody”.
She went on to explain that “we as an institution look back and say we could have done more work to more explicitly recognise the winners, the losers and the policies to reduce unfairness in societies”. Ms Georgieva acknowledged her predecessor Christine Lagarde for initiating this work, saying “she did a great job” addressing the issue of inequalities created by globalisation.
Ms Georgieva spoke to The National from Cote d’Ivoire before heading to Morocco, where she will be hosting leaders, central bank governors and ministers attending the annual World Bank /IMF meetings that open in Marrakesh on Monday as part of the international organisations’ efforts to be more inclusive.
It is the first time the meetings have been held in Africa since 1973, and Ms Georgieva said “I am so thrilled the meetings are in Africa”.
“Africa is like looking at the world's problems under a magnifying glass … they're all there. But Africa also has tremendous potential resources, innovative capacity and youthful population,” she explained.
“So if we manage to build a bridge between the countries where there is capital, but ageing population, and the countries where there is nothing of capital, but youthful population, we can energise growth for everybody.”
That will be a primary message from Ms Georgieva this coming week.
A holder of a master's degree in political economy and sociology, and a doctorate in economics, Ms Georgieva often thinks about what IMF programmes can do for more vulnerable people.
“We work at the fund, both on the cost of fragmentation, because an integrated global economy does produce more and cheaper for all of us. So we looked at the cost of trade disintegration, trade fragmentation,” she said.
“Yes, we have to integrate in our thinking and economic policies, security of supplies … it matters, but we can do it carefully.”
With the fallout of Covid-19 and the Ukraine war, Ms Georgieva said “the range of trade fragmentation is between losing 0.2 per cent of GDP [gross domestic product] and 7 per cent of GDP – it’s a big range, [meaning we need to] move the needle to the lower cost, accepting that some readjustment is necessary”.
That readjustment means greater inclusion for communities and countries. She explained that she is “a believer that we can have a rational economy that keeps the good things that come from the markets [and] competition … we want people to strive to do better, but pushes down those shortcomings that have created so much angst among people around the world”.
As for the differences between developed and developing countries, Ms Georgieva believes there is a “dangerous divergence between countries with strong fiscal positions, with more resources and countries with less”.
She stressed that this divergence is “bad for the countries that aspire to catch up but it is also bad for security and stability in the world – it is bad for everyone”. And this is where the IMF can come in, according to Ms Georgieva.
“The IMF's role, first and foremost, is to help countries build strong fundamentals.”
Understanding the importance of strong fundamentals is a personal matter for Ms Georgieva, who explained: “I grew up in Bulgaria. [What] I saw in my early life, all the way to my mid to late 30s, is how bad policies devastate economies.”
She went on to say that she had learnt “how my country deciding to borrow extensively, not thinking of servicing this debt, brought it to bankruptcy, and hyperinflation”, but she was quick to add: “I also saw how good policies [like] fiscal prudence, sound macroeconomic management can change the fate of countries.”
Based on that, “I'm a very firm believer for the fund to play its role, help countries with their debt policies, debt restructuring when they need it, and also help build transparent tax systems, good public spending, accountability of government to the ordinary people of government to the ordinary people”.
And while that is what Ms Georgieva sees as the fund’s “biggest role”, she added: “We also have a financial role, help countries to expand fiscal space so they can transform their economies.”
Her experience as an Eastern European citizen during the Cold War has greatly influenced Ms Georgieva and her thinking on not only the political economy of countries but also the impact of bad economic decisions on the lives of ordinary people. Born in Bulgaria in 1953, under communist rule, Ms Georgieva looks back fondly on her childhood but also speaks of the difficulties she experienced.
“I was very fortunate to be raised by a loving family … And I also experienced in my youth shortages of pretty much everything,” she said, something that her own daughter would experience also. “I know what it is to worry about feeding your child … I had to get up at four o'clock in the morning to queue and buy milk for my daughter, because of scarcity.”
Those experiences “taught me that good economic policies really matter … but also it taught me that we need to pay attention how these policies affect ordinary people”.
Ms Georgieva takes her position at the fund seriously and she carries those experiences with her, explaining “those of us who have the privilege to be walking in the high corridors of power” have an additional responsibility.
Ms Georgieva, who The National has interviewed on a number of occasions, never hides the fact that she never expected to be among those who walk those high corridors.
“At that time, if anybody was to tell me I've had this privilege, I would have laughed,” she said with a chuckle. But she was quick to become serious and added: “Now I do. And I have a responsibility to amplify the voices of people who count on institutions to care about them.”
Ms Georgieva is a believer in openness and the need for global co-operation. Her years living in Bulgaria at the height of US-USSR global divisions “taught me that a divided world leaves so many people out, virtually out in the cold during the Cold War, and that drives my determination to work for a more collaborative world”.
Ms Georgieva started her term as Managing Director of the IMF on October 2019 and shortly afterwards the Covid-19 pandemic struck, causing major global disruption and economic problems globally, further complicated by the war of Ukraine in 2022.
All this volatility has led to “a recognition that we are in a more shock-prone world”. That recognition has meant that Ms Georgieva has dedicated a large part of her time leading the IMF to prepare countries for shocks and strengthening precautionary instruments at the fund.
“We have to be very swift in adjusting to the unexpected,” she said. She also stressed the importance of “bringing the world together, because only together we have the strength to respond”.
While explaining her approach to dealing with these crises, Ms Georgieva lauded the IMF, saying: “I am incredibly fortunate to be the head of a very strong institution, my team has done an exceptionally good job”, which has allowed her and the organisation to face the challenges that the past four years have presented.
The meetings in Marrakesh next week will be an opportunity to take stock, as Ms Georgieva called Covid-19 “a crisis like no other that required a response like no other”. Since Covid-19 was declared a pandemic, the IMF has “injected nearly $1 trillion in reserves and liquidity into the world economy, $650 billion through an SDR [special drawing rights] allocation, $320 billion in lending, $160 billion when Covid hit, $160 billion when Russia’s war in Ukraine hit”, according to Ms Georgieva.
But there will also be discussion around the challenges of the future, which she has also spent time assessing.
“I realised that we need to look into the future and see what will be the sources of shocks and what are the sources of strength,” she said.
The IMF has “identified climate shocks as macro-critical and therefore the fund’s integrated in our policy discussion as well as our financing instruments”.
Having started her career at the World Bank as an environmental economist in 1993 – and rising to senior positions including director of environment and director for environment and social development at the World Bank – Ms Georgieva is fully aware of the needs for climate action. With Cop28 due to be held in the UAE later this year, Ms Georgieva stressed the importance of financing climate action and the energy transition.
“We are slow in tackling what is potentially an existential crisis,” she said. “If there is one issue where the world must come together, that is paramount for our future, it is how we mobilise in the fight against climate change … all financial institutions have a responsibility to work together.”
She stressed that “the multilateral development banks in particular [must] open up opportunities for private capital to flow into emerging markets and developing economies”.
As for opportunity, Ms Georgieva stressed the importance of inclusion. “We recognised that women are still not a fully utilised resource” while also looking to “invent new solutions for this world that changes so much”. Inclusion also means “helping poor countries and vulnerable middle income countries”, according to Ms Georgieva who sees allowing countries to rise up economically as a key part of her mandate, and which the fund helps in part enable through concessional financing.
And as her own childhood and her daughter’s influenced her thinking, today Ms Georgieva’s granddaughter often leads her thinking about modern-day change and the future.
“We have to recognise that change is not only necessary, it is happening faster. We see how technological transformation accelerates change. We have digital connectivity now that we didn't have when I was growing up,” she told The National.
She then recounted a story showing the extent of “accelerated change”, saying” “I remember talking to my granddaughter, as a good grandma, and telling her when I was her age (she was at that time five) there were no computers, no TV, she looks up at me and says, so you only had iPads.” She uses that as an example of “dramatic accelerated change and much more open world in which information flows, so freely, we have to recognise that it requires adapting the economy to this more open and inclusive world”.
The meeting in Morocco will also be an example of the type of solidarity that is needed, as it comes a few weeks after a devastating earthquake struck Morocco.
“It is a great opportunity for solidarity with the Moroccan people, also solidarity of the world, so we can address and solve problems that are common for all of us,” she said.
She closed by saying: “I want to express my heartfelt sympathy to the Moroccan people. And my gratitude and their hosting us for our meetings.”