INTERNATIONAL MONETARY AND FINANCIAL COMMITTEE
Forty-Sixth Meeting
October 13-14, 2022
Statement No. 46-11
Statement by Mr. Taleb
Algeria
On behalf of
Islamic Republic of Afghanistan, Algeria, Ghana, Islamic Republic of Iran, Libya, Morocco,
Pakistan, Tunisia

Statement by Honorable Salah-Eddine Taleb
Governor of the Bank of Algeria
On behalf of Afghanistan, Algeria, Ghana, Islamic Republic of Iran, Libya,
Morocco, Pakistan, and Tunisia
Since our last meeting, the global economy has weakened further and its prospects
have become more uncertain, reflecting the three recent major overlapping,
connected and mutually reinforcing global crises: the lingering supply-demand
imbalances of the pandemic; the fallout from the war in Ukraine; and soaring
inflation. The "cost-of-living crisis" has hit vulnerable countries everywhere and
vulnerable groups in every country, including the middle class, the hardest. To be
clear, the underlying global price pressures, particularly food and energy, were
already evident in late 2021, but were sharply accentuated by sanctions and
disruptions caused by the war in Ukraine. Virtually all risks identified by the April
2022 WEO materialized, but the inflation surprise seemingly blindsided
policymakers in major countries, compelling them to move aggressively to tighten
monetary policy. The negative spillovers of the tightening of global financial
conditions are being acutely felt in Emerging Market and Developing Economies
(EMDEs), including the frontier economies and middle-income countries in our
constituency, through currency depreciation, capital outflows, higher external debt
servicing cost, and diminished (or even loss of) access to international financial
markets. The withdrawal of pandemic-related relief measures in major economies
and the economic slowdown in China also weakened external demand and, together
with the lingering supply chain constraints, contributed to the slowdown in global
trade. The recent geopolitical developments have also caused major trade
disruptions, tilting policies towards greater self-reliance or "friend-shoring" among
the advanced economies (AEs) in order to protect their supply chains. The
mediumterm scarring effects of the pandemic on the products and labor markets and
productivity, yet to be fully assessed, also weigh on growth. The October 2022 WEO
has pared down growth projections for the fourth consecutive time since last year
with a clear possibility of further downgrades if the geopolitical risks are not
diminished quickly and materially. We are increasingly concerned that the current
geopolitical risks will turn into lasting geopolitical fragmentation, posing serious
threats to global trade, capital flows, technology transfer and climate policy
cooperation.
It is still early to declare victory in our fight against the pandemic, a
once-in-acentury health crisis that paralyzed the world with untold loss of lives and
livelihoods. It is important that we do not lose sight of resurgence risks of new and
more virulent COVID-19 variants in the context of a still-low vaccination coverage
in the low-income countries (LICs), particularly in Sub-Saharan Africa, and vaccine
hesitancy in parts of the AEs. The cooperation that brought us together in the global
fight against the pandemic should continue with full force towards equitable and
affordable global accessibility of vaccines, tests, and treatments.
The two recent crises have brought to fore the issue of food insecurity that had been
brewing under the surface. Chronic hunger, child and mother malnutrition, and
pervasive poverty, always features of poorest members, have been exacerbated by
the surge in global food prices that has pushed many more millions into poverty,
even in some middle-income countries. The international community has to rise to
the challenge. In this connection, we welcome the IMF's new food shock window
as a part of its emergency support facilities that should be accessible to all eligible
members in an evenhanded manner and with the same sense of urgency.
The sad plight of the Afghan people should not be forgotten. Afghanistan is facing
the highest incident of insufficient food consumption in the world, with 90 percent
of households, and an even higher percent of households headed by women, are
facing insufficient food consumption. Close to 4 million Afghan children are acutely
malnourished. It is difficult to imagine how long and how far this situation could
continue.
Going forward, we all bear responsibility of putting the world economy back on a
sustainable and steady track. The expectation is for the AEs to maintain the delicate
balance in the inflation-growth trade off, recognizing the significant negative
spillovers of policy mistakes, in either direction, as they try to lower inflation and
keep inflation expectations anchored. While we will all benefit from lower inflation,
we cannot afford an overtightening of monetary conditions when the world is at the
cusp of a serious recession. We also see no justification for maintaining restrictions
on food exports by some food-rich countries, on medicine by some producing
countries, and sanctions on some major oil exporters when the world is beset by high
food and energy insecurity and health crisis.
We endorse the GPA's emphasis on "acting together and acting now" to alleviate
the immediate hardship due to successive years of global crises, and to build
resilience for addressing future shocks that could come with more frequency and
greater severity. However, as mentioned earlier, the basic requirement of "acting
together" for the common good is at risk by the growing global fragmentation into
economic and trade blocks, including the critical energy sector. We welcome the
IMF's continued commitment to help members in need by enhancing and adapting
its lending toolkit. The newly established Resilience and Sustainability Trust (RST)
is an important addition to the IMF's toolkit to help members build strong resilience
to various shocks, including climate change and pandemics, through long term
financing. We are encouraged by the strong uptake so far and look forward to seeing
several RST-backed programs brought for the Board's consideration by the end of
this year.
Against the background of swift tightening of global financial conditions, we are
concerned about the precarious debt situation and the diminished debt service
capacity of LICs and EMDEs, with many of them already in debt distress or at high
risk of debt distress. The IMF has a key role to play in helping members with
sovereign debt issues and in making the debt resolution process more predictable
and efficient. In this vein, we support the joint efforts of the IMF and the World
Bank to strengthen the Common Framework for debt treatment in a coordinated and
timely manner, and in total concert with all creditors.
We are all committed to a greener world and attach great importance to
transformational reforms required to address climate change-related challenges for
the benefit of generations that follow. No country and no region is immune to climate
change. It is as much an existential threat to our constituency and to the MENA
region as it is to other constituencies and regions. In our region, we have experienced
historical floods at the same time as historical droughts. We have to recognize, and
collectively address, the existing highly inequitable burden sharing, where countries
with negligible carbon footprints bear the weight of negative externalities associated
with climate distress created over the years by large emitters. Our countries are
committed to their pledges made under the Paris Agreement with the recognition
that there could be country specific strategies towards the same greener targets and
objectives.
Finally, we reiterate our call for a strong, quota-based, and adequately resourced
IMF at the center of the global financial safety net. We call on the IMF to ensure the
timely completion of the 16th General Review of Quotas by December 2023. As
before, we call for a revised quota formula that protects the share of poorest
members, and for an increase in the IMF's quota resources to lessen its dependence
on borrowed resources and to reinforce its lending capacity. We remain concerned
about the projected sharp decline in the IMF's lending capacity which, unless
reversed, could imperil the IMF's effectiveness and credibility.