Kristalina Georgieva: “The IMF has moved with the times”

The world is in a difficult economic environment. How the International Monetary Fund can help in such a time and how it supports Ukraine, says IMF boss Georgieva in the tagesschau.de-Interview.

tagesschau.de: Ms. Georgieva, what role can Germany play in the reconstruction of Ukraine and in financing it?

Kristalina Georgieva: We are not yet at a point where one could speak of reconstruction, but planning for this must begin now. And Germany’s role is, for example, to support these plans and to contribute lessons from the past from countries that have already gone through such processes, so that Ukraine can also successfully follow this path.

tagesschau.de: What sums are we talking about when it comes to financing this path? The head of the EU Commission, Ursula von der Leyen, has already announced 18 billion dollars a year from EU funds. But overall demand will be much higher.

Georgieva: These 18 billion must be launched as quickly as possible. Because the Ukrainian population and the Ukrainian economy are in dire need of help. Whether such sums are sufficient remains to be seen. We don’t have a crystal ball in which to see how this war is unfolding. But this signal from Europe is already very promising. Especially since an offer of the same amount has come from the United States. $36 billion is no trivial sum.

But there will have to be other international donors – both donors and international organizations. In that regard, we, the IMF, are also looking at ways to support the Ukrainian economy. We have just finished a project that has outlined a plan of where we can help over the next few months.

“We have to come up with reforms for the future”

tagesschau.de: What will this help look like in concrete terms and how much will it be?

Georgieva: So far, the IMF has granted $2.7 billion in emergency aid. This makes us by far the largest single donor among the international organizations providing aid to Ukraine. We are also planning other types of funding that will benefit Ukraine. Another two billion dollars come about in this way.

Looking to the future, we aim to launch a new program for Ukraine. The decisive factor here is not just the money, but rather the political advice that Ukrainian authorities and institutions receive from us. They face challenges that have never existed before.

Just one example: cash. One of the problems is the ability to provide cash, while the day-to-day banking system can hardly function under the current conditions – because of the Russian bombing. The solution we found together was to use cash from stores for the ATMs instead of going through the banks.

And then another example from political consultation: How can government revenue be increased? The easiest way was via VAT. We worked on that even before the war. This is also an example of how past reforms are paying off today. Now we must think of reforms for the future that can work for a war-torn economy.

“Great determination in Ukraine”

tagesschau.de: Are we not dealing with a perfect storm that has been brewing in the global economy? The combination of rising interest rates and relatively high inflation, the energy crisis, ongoing problems in global trade and supply chains, and shortages of raw materials: doesn’t all this make any kind of aid more difficult?

Georgieva: The determination is great among the state and population of Ukraine – and among their partner countries. Yes, this is a difficult time globally: inflation is very stubborn and that means central banks have to stay on course to keep it down. With their measures, however, they then in turn cool down the economic recovery.

In such an environment, we have to realize that it is difficult for many people in the world. But the situation is most difficult for people who live their everyday life under bombing. They live with high risks for themselves, their children and their families.

tagesschau.de: Acceptance of the IMF has not always been high in the countries it has helped. How optimistic are you about Ukraine?

Georgieva: Since the corona crisis, we have experienced a remarkable change because we have helped quickly in many cases. And in 96 countries worldwide. As a result, many have experienced the IMF as a helper who stands on the side of the victims. We have also helped many countries assess the impact of external shocks. Because such a shock was the corona virus – it came to the countries from the outside and not from within.

We have been able to help many countries become more resilient to such external shocks. Since the beginning of the war against Ukraine, we have received and approved aid requests from 16 countries. We are currently processing 36 more applications. In short: today’s IMF is no longer the one from grandmother’s days, but has moved with the times.

“Bravo to the German people”

tagesschau.de: Germany today concluded a deal with Qatar for liquefied gas supplies: how do you rate that?

Georgieva: Germany has remarkably diversified its own energy supply since Russia halted previous gas supplies. Every step was a step in the right direction. Germany has also been very efficient at conserving energy. Gas consumption in the past three months was 15 percent lower than calculated for the same period over the past five years.

So: Bravo to the German population. It shows determination and in view of the climate crisis – it should continue to do so, it is needed!