Pressure on Ukraine’s budget will persist and the country requires more external assistance in the form of grants and concessional funding to keep the economy afloat, the IMF’s Kristalina Georgieva said on Thursday. Speaking alongside Ukraine’s Prime Minister Denys Shmyhal and World Bank President David Malpass at a discussion of support for the war-torn country, Georgieva said foreign reserves could fall as restrictions on imports are relaxed and damage inflicted on key infrastructure reduces exports, especially of agricultural goods. But Georgieva said the Ukrainian government’s management of the economy had been remarkable and helped to prevent problems often associated with war, such as hyperinflation and currency devaluation. “You have acted decisively to preserve the availability of foreign exchange reserves and reduce exchange rate uncertainty. You have supported financial stability and protected priority budget payments. And you have ensured that people in Ukraine can still access the services and the cash they need.” Ukrainian President Volodymyr Zelensky, who joined the discussion via video link from Kiev, said Russia’s invasion had inflicted terrible destruction and blockades of Black Sea ports had led to a collapse in agricultural exports with far-reaching consequences for the world economy. “To stop the war now…is the only secure way to stop a food crisis.” Georgieva estimated that the country would require around $5 billion in financing per month for the next 2 to 3 months simply to allow the government and economy to function. More external assistance—especially grants and concessional funding—would be needed, she added. This week the IMF said that Ukraine faces a deep recession, projecting the country’s GDP to shrink by 35 percent this year in the new World Economic Outlook. Reaching climate goals requires changes in the labor market and the creation of more green jobs. But what costs and incentives will these structural shifts entail? | |  |
Katharina Bergant and Rui Mano from the IMF’s Western Hemisphere Department analyzed geographical patterns of green and pollution-intensive jobs in the US. They explain the findings of their research in this Analytical Corner, highlighting that the needed climate transition doesn’t have to be costly for the US due to its geographically diversified economy and flexible labor markets. Meanwhile, in a separate session, Diaa Noureldin and Marina Tavares from the IMF’s Research Department pointed out that the average green-intensive job has an earnings premium of 7% above the average pollution-intensive job, which could help attract more workers to greener jobs. All the IMF’s Analytical Corner videos, covering debt, digitalization, supply chains, and inclusive recovery, are available to view here. Wrap of the WeekGlobal economic prospects have been severely set back and inflation is set to last for longer, largely because of Russia’s invasion of Ukraine, the IMF’s Chief Economist Pierre-Olivier Gourinchas told a press briefing on Tuesday. | |  |
In this week’s World Economic Outlook, the IMF revised down its projection for global growth to 3.6 percent in both 2022 and 2023, reflecting the direct impact of the war and sanctions. The war risks more permanent fragmentation of the world economy into geopolitical blocs, with their own reserve currencies and systems for cross-border payment, Gourinchas said, in what amounts to a serious challenge to the rules-based framework that has underpinned international and economic relations for the past 75 years. In a conversation with World Bank President David Malpass, IMF Managing Director Kristalina Georgieva drew attention to the war’s impact beyond Europe, noting that emerging markets and developing economies will still be 6 percent below their 2019 pre-pandemic projections by 2026. Georgieva returned to the risk of fragmentation at the launch of the Global Policy Agenda on Wednesday, warning that retreat into rival blocs could undo the progress that has been made supporting growth and spreading prosperity since the 1990s. A more fragmented world required more cooperation, and the Fund would strive to bring countries together, she said. Tobias Adrian, Director of IMF’s Monetary and Capital Markets Department Inflation, singled out inflation as the single most important challenge of our time and said central banks should raise interest rates aggressively to bring it back down to target. He was speaking at the launch of the latest Global Financial Stability Report, which warned that financial markets would be tested by the war in Ukraine. Launching the Fiscal Monitor on Wednesday, the IMF’s Vitor Gaspar said record debts and rising borrowing costs meant low-income countries have very limited fiscal space to protect their populations from spiking food prices. Food prices are particularly important for the poorest countries and people, accounting for up to 60 percent of household budgets in some developing economies, he told a press briefing. Meanwhile, Georgieva joined US Treasury Secretary Janet Yellen and others to discuss the response to the global food crisis. | 
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