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Full interview: IMF managing director Kristalina Georgieva — Transcript

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0:00Thank you so much for making time for
0:01us.
0:02Uh we're in an incredible moment right
0:05now. Um how do you calculate the
0:07economic shock from this Mideast war?
0:11>> We look at the size of the impact and
0:15the duration of impact. And what I can
0:19tell you is that this shock is large.
0:2413% of oil, 20% of gas that would have
0:29flown in the world is now stuck for 5
0:33weeks and counting.
0:35>> Mhm.
0:35>> It is global. Everybody uses energy.
0:40Everybody feels the pinch of prices
0:43going up.
0:44And it is asymmetric. It affects
0:47different countries differently. If you
0:50are in the vicinities of the conflict,
0:53it's a big hit on you. If you are an oil
0:56importer, it is a big hit on you. If you
1:00have no reserves to protect yourself, uh
1:03you're in a very tough uh situation. We
1:06are running scenarios depending on the
1:10duration
1:11>> Mhm.
1:12>> of the war. Now we have hopes for peace.
1:17>> Yeah.
1:17>> That would improve the uh conditions for
1:20everybody. But we are also looking at
1:23impact on infrastructure.
1:25A lot has been damaged and it would take
1:29time to bring back to full operation.
1:33>> So let's pull that apart a little bit.
1:35Um it appears
1:37like Asia bore a lot of the economic
1:40impact here. South Korea, they've got a
1:42big computer chip industry. They have
1:45called on their citizens to conserve
1:46energy. India, they're rationing energy.
1:49The Philippines had a national energy
1:52emergency. The Australian gas stations
1:55are running out of fuel. It seems like
1:57there's a large part of the planet
1:59that's really in pain.
2:00>> Oh, yes. People are hurting.
2:03They're hurting because of
2:07sheer lack of
2:09quantities.
2:10If you are in the Philippines,
2:13you're queuing the same way people were
2:15queuing here in the '70s
2:17to fill your tank.
2:19>> Mhm.
2:20>> Uh they are hurting because they may be
2:24in need of helium
2:27for semiconductors or for MRIs.
2:31>> And that comes out of Qatar, out of the
2:32Middle
2:32>> And that comes out of Qatar and now it
2:35is
2:36cut
2:37to size.
2:39They may be hurting because of
2:41fertilizers.
2:43Now is the planting season.
2:46If you are not getting fertilizers or
2:48not getting them at a reasonable price,
2:50we may see spike in food prices coming.
2:55They're hurting because of remittances.
2:57Just think how many people live in the
3:00Gulf, work in the Gulf, send money home
3:03to places like India and Bangladesh.
3:06And this money is not coming. They're
3:09hurting because of transportation. I'll
3:11tell you, my heart goes for Sri Lanka. A
3:15country that is coming out of a big
3:18shock. They were
3:21now affected because a third of flights
3:25to Sri Lanka go through the Gulf. Now
3:29tourism is going to be to be hammered.
3:32So for many, many reasons, countries are
3:34affected. And when you look at the size
3:36of the impact,
3:38it depends on
3:40how much your your reliance on imports
3:44is, but it also depends on what is your
3:47fiscal position. Do you have capacity to
3:50absorb the shocks? Guess who has least
3:52capacity? Poor, vulnerable countries. Uh
3:56whether they are in Asia or in
3:59sub-Saharan Africa,
4:01uh they're being uh hammered uh
4:03dramatically. And when we discuss our
4:06response, we will zero in on these uh
4:09highly vulnerable uh countries.
4:12>> So, the United States, here Americans,
4:14they're still spending, they're still
4:16driving, but they have seen inflation go
4:18up.
4:19>> Mhm.
4:19>> Prices are at the gas pump.
4:21>> Right. I mean, the US is in the category
4:23of countries that are somewhat less
4:25impacted because US is energy exporter.
4:28>> Mhm.
4:28>> Uh but, as I said, everybody feels the
4:32pinch of prices going up. Why? This is a
4:36negative supply shocks. You have less
4:39energy, but the demand is still the
4:42same. What happens? Prices go up. And
4:45here in the United States, uh people
4:48have not quite yet seen inflation going
4:51down to target. We were projecting this
4:54to happen by early '27.
4:57Now, that may be somewhat delayed. And
5:01what does it mean? It means that
5:04people experience
5:06a tax on their uh income.
5:10Who is most affected? Of course,
5:13low-income part of the population.
5:16>> Well, at at one point, oil prices surged
5:19nearly 50% because of this war in Iran.
5:22And you called it the largest disruption
5:24to global energy markets in modern
5:26history.
5:27>> Mhm.
5:28>> As increases as you said to fertilizer,
5:30to other prices that are going to push
5:31up food,
5:32do you see this impact stretching
5:35through 2026, even if we get a ceasefire
5:40that sticks?
5:40>> So,
5:41the impact is baked in because already
5:46the tankers that should have arrived in
5:48Asia have not arrived, right? So, we
5:50already have that impact. But then, on
5:53top of it, we have the infrastructure
5:56impact. 72
5:59energy facilities have been hit. 1/3 of
6:04them
6:05severe damage. You take the
6:08gas field in Qatar,
6:11it would take 3 to 5 years to reach its
6:15full capacity. That has significance.
6:18And then, we have other infrastructure
6:21impacts like refineries.
6:25If they don't receive oil on a regular
6:28schedule,
6:29they have to shut down. When they shut
6:32down, to restart, that is with delay.
6:35So, yes, we are going to see some drag
6:37of this crisis over the year.
6:41But, if we have peace, of course,
6:44conditions are likely to improve faster.
6:47Above all, because confidence is going
6:50to benefit from the knowledge that there
6:53is a resolution of the fighting.
6:57Uh before something that that is very
7:00very important to recognize, the world
7:02economy has been incredibly resilient.
7:04We have been hit by one shock and
7:06another and another.
7:08We were actually projecting a small
7:12upgrade
7:14for growth in 2026,
7:17had it not been for this war.
7:21Now, we are going to have a a downgrade,
7:24and the size of this downgrade will
7:26depend on these two things: duration and
7:30speed with which uh everything can come
7:33back
7:34to the same level of production that we
7:36had before.
7:37>> Well, but just to put a fine point on
7:39it, when you're when people look at the
7:42effort to get even a a ceasefire or some
7:44kind of peace deal,
7:46if they think, "Well, if this works, my
7:49prices are going to go back to where
7:50they were on February 27th, the day
7:52before this war began." You're saying,
7:55"No, it's going to take a while."
7:56>> It would take time.
7:58It would take It would take some time.
7:59Yes.
8:00>> Uh and it would take more time for uh
8:03locations that are experiencing higher
8:07degree of disruption. And that's why we
8:10need to remember the asymmetry of this
8:13shock.
8:14>> Mhm.
8:15>> And spare a thought for these
8:17destinations where it would be still a
8:21matter of scarcity of supplies for some
8:25time.
8:25>> And we're hearing from European airlines
8:27issues with access to jet fuel. You're
8:30talking about Asia there. People are
8:32going to see their airline ticket prices
8:34elevated. They're going to experience
8:36this for some time.
8:37>> Uh yes. Uh the one good thing that we
8:40need to remember is that whenever we
8:42have an energy shock,
8:45we improve.
8:47Every energy shock in the past would
8:49lead to two things: more energy
8:52efficiency
8:53and more diversification of energy
8:56supplies.
8:57>> More green energy.
8:58>> More green energy. I We We We can show
9:01how that goes up. You get the shock and
9:03then you say, "Wait a minute, what can I
9:05do to reduce the impact?" That would
9:07come. The problem is
9:10it would take a year, a year and a half,
9:12two years.
9:13In meanwhile,
9:15people and businesses will be hurting.
9:19>> So, what is the IMF doing right now to
9:21soften the blow of this crisis for those
9:24who are hardest hit?
9:25>> Well, the first thing we do is uh to
9:27give good advice to countries.
9:30Uh the at the moment like this,
9:32everybody rushes to take action. And
9:34sometimes it's good and sometimes not so
9:37good.
9:38Don't impose restrictions
9:43on
9:45your trade with uh petrol product
9:47products.
9:49Why? Because if we make the situation
9:51worse, prices would go up even more.
9:54Uh we are telling countries, "If you are
9:56to be helping people and businesses,
9:59do it in a targeted manner. Do it
10:02carefully because
10:04the world has a problem with fiscal
10:06space. All these shocks have led us
10:10to borrow more
10:12>> Mhm.
10:12>> and it has increased the cost
10:15of
10:16this borrowing on budgets. So, if you
10:20are to help,
10:21help the most vulnerable. Target your
10:23support and do it on a temporary basis."
10:26>> So, we have seen so many shocks, as you
10:29said. Two major military actions in
10:31Iran. You've got the war in Ukraine
10:32still going on. You have the trade war.
10:35All of this still just coming out of
10:36COVID.
10:37>> Mhm.
10:38>> Have you been surprised that we are not
10:40in a global recession? And the United
10:42States is not headed for recession.
10:45>> Uh
10:45we
10:46were not so surprised for one reason.
10:50What we have seen over these last
10:53shocks is that the world is building
10:56resilience
10:58to it.
10:59And the resiliency is a product of three
11:03things. Number one,
11:06across the world, governments have
11:08pulled out of managing the economy,
11:12managing companies, and let the private
11:15sector do the job.
11:17Private sector is more agile, more
11:19adaptable. So, when we are hit,
11:22the response is faster and more
11:25efficient.
11:26>> Mhm.
11:27>> Two,
11:28we have seen over the last decades
11:31many countries, emerging market
11:33economies,
11:35taking actions to strengthen their
11:38fundamentals.
11:39Independent central banks,
11:42fiscal councils,
11:44that leads to good policies that protect
11:47countries,
11:49especially at the time of a shock. And
11:51number three, innovation.
11:54Look at the technological transformation
11:57that is taking place in the world. It's
12:00incredible. So, all these two things
12:03have buffered uh our world against
12:07recession. Now,
12:08we're not immune against recession, uh
12:10Margaret, so we still have to be careful
12:13to follow good policies and to keep our
12:16institutions in good health to protect
12:18us.
12:18>> Well, the world's two largest economies
12:20are set for a meeting next month,
12:22mid-May. President Trump and President
12:24Xi.
12:25Um do you think that that trade war
12:28is cooling off? I mean, how
12:31concerned are you?
12:33>> It is very good that the two largest
12:35economies found a way uh to reduce trade
12:38frictions. Uh we see it in the
12:41performance of both.
12:43And when they do well, there are
12:45positive spillovers for the rest of the
12:47world. So, in this sense, uh we very
12:50much encourage
12:52discussions that lead to reducing
12:55the uh trade tensions between uh these
12:58two large economies, uh but also they
13:00set up a good example for the rest of
13:02the world. Uh a trade war has no
13:06winners.
13:07>> Did you Do you think that that global
13:10economists really overestimated the
13:13negative impact of the Trump tariffs?
13:16>> Ah, very good question. So, the fund,
13:18when the tariffs came,
13:20was among the very few institutions that
13:23were not not projecting recession. We
13:26did project some slowdown in growth. We
13:28did see some slow down in growth.
13:30>> be some somewhat disruptive?
13:31>> Uh we thought it would be somewhat
13:33disruptive. It was somewhat disruptive.
13:36But then what happened was um an
13:38adjustment. Adjustment in the United
13:40States with agreements that have reduced
13:43the pressure that tariffs would put here
13:47and on the rest of the world. And we saw
13:49the rest of the world uh saying, "Okay,
13:52let's see how we can trade more with
13:55each other."
13:56>> Mhm.
13:56>> Massive increase in trade agreements um
13:59more attention to regional trade. If you
14:03look at the place like
14:04>> You're saying turning away from the US.
14:06>> Well, they the US is saying, "We want to
14:08to have an economy that uh is mostly
14:11based on investing at home, having
14:14manufacturing at home." That's a choice
14:16um uh that the country is making.
14:19Other countries are looking into their
14:22uh economic future.
14:24Small open economies, they have no
14:26choice. They have to find ways to trade
14:28with each other because otherwise it
14:30would be very costly for their people.
14:32>> Mhm.
14:32>> So, the developments are
14:35relatively
14:37calming in a sense that uh
14:40we see trade
14:42like water. You put an obstacle, it goes
14:47around it.
14:47>> Mhm.
14:49Well, it's interesting because when we
14:51were speaking recently to the head of
14:52the European Central Bank, Christine
14:54Lagarde, who used to run the IMF, uh she
14:57told us the attraction of the dol-
14:58dollar has eroded.
15:01She said you need geopolitical
15:02credibility, rule of law, strong
15:04institutions, and a strong military. And
15:06the volatility fueled by the Trump
15:08administration, she she said it hasn't
15:10been helpful. Would you agree with that?
15:13You see an erosion in the trust and
15:16confidence in the American dollar.
15:18>> What we see is that the uh
15:20huge amount of transactions are in
15:24dollars.
15:25We see assets
15:27in dollars. We actually see the rest of
15:29the world rushing to the United States
15:32to invest here. Why? Because of the high
15:36productivity growth and the strength of
15:38the US economy.
15:40At the same time, the world is
15:44more multi-polar.
15:46There are more centers of economic sig-
15:50nificance. And as a result, naturally,
15:53we see some shift towards
15:56diversification of reserves that
15:58countries are holding. And I believe
16:01that
16:02given the depth
16:04of the US capital markets,
16:07given the strength of the US economy,
16:11the attractiveness of the US economy,
16:1375% of financial assets are here.
16:17>> Mhm.
16:17>> Uh that means that um uh the role of the
16:20dollar uh is and remains uh quite
16:25significant.
16:26>> As we've seen like the Wall Street
16:27Journal, for example, talk about Iran
16:29charging tolls for
16:31you know, boats that go through the
16:32Strait of Hormuz, they're charging in
16:34cryptocurrency or the Chinese currency.
16:38>> And of course we are
16:39Of course we are going to see in a world
16:41that has
16:43multiple centers
16:45of gravity, we are going to see
16:47different choices. Uh when we have the
16:50evolution or actually the revolution of
16:54digital money, of course there would be
16:56shift in that direction. The question is
16:59how big is the size? And does it mean
17:02that somehow we would wake up tomorrow,
17:05you and I, and we'd say, "Oh, what
17:06happened? You know, our savings are in
17:09dollars. Should we worry about that?"
17:11Don't worry.
17:13>> I want to come back to technology
17:14because you raised that and I want you
17:15to to to clear up that point. You've
17:18said with the growth of AI, artificial
17:21intelligence, in advanced economies in
17:23particular, looks like a tsunami about
17:26to hit the labor market.
17:28That's a scary thing for a lot of people
17:31to digest.
17:33Um how disruptive is this going to be to
17:36our way of life?
17:37>> And digest we must because uh
17:40AI is happening.
17:42I'm telling my staff at the fund AI or
17:45die. It is transforming the way we we
17:48all work.
17:50Uh it is very significant and uh
17:53frankly, I don't think that we are
17:55ready.
17:56Uh when we look at the impact of AI on
17:59labor markets, what do we find?
18:02We find that already one in 10 jobs here
18:06in the United States requires new skills
18:10and it pays more.
18:12When it pays more, what do people do
18:15with the money? They go out and spend in
18:17restaurants, in gyms.
18:20That increases demand for low-skilled
18:24labor.
18:25But the middle, the jobs that are
18:28routinely start the jobs for young
18:31people, this middle is shrinking fast.
18:34>> The new college graduates that are
18:35having problems.
18:37>> So when we
18:39crank the numbers, the total employment
18:42actually went slightly up, but because
18:46of low-skilled jobs.
18:48>> Mhm.
18:49>> So
18:50are young people dreaming to be
18:52baristas?
18:53I don't think so. How can we prepare
18:57young people to be entrepreneurs?
19:01To be agile to changes in the labor
19:03market. How can we change the mindset
19:07including in our education system
19:10for a world of constant learn learning
19:13and permanent change.
19:16That requires attention, and here is my
19:18big worry.
19:20What I see in the world today is
19:23attention deficit disorder. We cannot
19:26hold
19:27>> Yeah.
19:27>> on a topic long enough.
19:30Uh and and AI is this topic. Unless we
19:33concentrate on understanding labor
19:35market impact,
19:37how we need to change education, how we
19:40need to change the business environment,
19:42I think we would find ourselves with
19:45winners
19:47big time
19:48and many, many losers. The
19:52ability of AI to increase inequality, to
19:56open up this accordion of opportunities
19:59>> Mhm.
19:59>> widely is very significant both within
20:03countries and across countries. So, we
20:06better
20:07focus.
20:09>> Get ready. CBS has learned that there
20:11was an urgent meeting held by the
20:13Treasury Secretary and the Fed chair
20:15just a few days ago
20:17um with Wall Street leaders to discuss
20:19specifically AI and this new model from
20:22Anthropic. There's deep concern.
20:26Are you concerned? Why are they scared?
20:29>> Well, because uh
20:30we get into cybersecurity.
20:33And the risks have been growing
20:36exponentially.
20:38Yes, we are concerned. We are very keen
20:41to see more attention to the
20:43guardrails
20:45uh that are necessary to protect
20:47financial stability in a world of AI. Uh
20:51and I'm
20:52>> Those don't really exist right now.
20:53>> I'm I'm we don't have the ability
20:57to us as a world
21:00to protect
21:02the international monetary system
21:04against
21:06massive cyber risks. We have to work on
21:09that. We have responsibility at the
21:11fund. We are actually working with our
21:13members
21:14to bring that common understanding of
21:17what the risks are, how they can be
21:19managed because
21:21time is not our friend on this one.
21:23>> No, but but you need institutions like
21:25the Fed and the central banks to figure
21:27out how to manage
21:28the risk of cyber attacks of height hack
21:31hacking as people would know it.
21:33>> We do we do need
21:36the key institutions for financial
21:39stability and of course major central
21:41banks are among those. We need them to
21:43be very attentive and we also need them
21:45to work together
21:46because
21:48yes, this is an issue that has been
21:50addressed here in the United States,
21:52but it is an issue that
21:55easily can present itself in other
21:59parts of the world.
22:01And that is why we need people to
22:03cooperate.
22:04>> To cooperate.
22:06Well, the president of this country
22:08continues to question the value of
22:10multilateral institutions. The IMF is
22:12one of those created out of the ashes of
22:14of World War II.
22:16Um, do you think that the global
22:20financial order
22:22does need to be rebooted a little bit
22:24because you're talking about a small
22:25portion of it,
22:27but is there truth to that idea that we
22:29need to really reboot these systems,
22:32these international institutions to meet
22:34the moment?
22:35>> The world is changing
22:37very rapidly and change is unstoppable.
22:41Therefore, institutions like the IMF, we
22:44have to lean forward and we need to take
22:47the responsibility to be
22:50at par with this change.
22:52What does it mean
22:53for us?
22:55It means to identify
22:58key risks and opportunities for the
23:01world economy and then bring our
23:04membership
23:05to work on those.
23:07Let me make a simple point.
23:11Yes, we need to upgrade
23:13the international monetary system.
23:18While we do that, we also have to
23:21protect the assets we have.
23:23>> Mhm.
23:24>> So, what is our asset uh proposition?
23:28We are the only institution that make
23:31the pulse of each and every economy on
23:34this planet, big, small, rich, poor,
23:38and then presents a picture of what is
23:40happening in the world for everybody to
23:43see.
23:44And we are the only institution that can
23:46rescue
23:48countries in trouble.
23:50We can come up with large financial
23:52support on a dime, and we have done it,
23:55we will continue to do it
23:57in a world of more frequent shocks.
24:00>> Mhm.
24:01>> We need an anchor of stability, and this
24:05is what the fund is. When it was
24:06created,
24:08the world was a calmer place.
24:11Now it is not.
24:12>> the world was a calmer place back when
24:14this was created?
24:14>> Well, when it was created, remember
24:17people traveled on
24:19ships
24:21to come to the annual meetings.
24:23>> of change Okay.
24:24>> Now we are in a much much more rapidly
24:27changing world, and
24:30in this world, you need even more to
24:32have an anchor, an institution that
24:35protects you. And of course, an
24:37institution that works with others, not
24:40on its own,
24:42uh to deliver that stability
24:45in a sea of constant change. I I very
24:48often Margaret, I very often feel like a
24:50captain on a ship in rough waters.
24:54Uh and rough waters we will have.
24:56>> Mhm.
24:57Quickly on that, uh the war in Europe in
25:00Ukraine, um
25:02the IMF has helped Ukraine quite a lot.
25:03You're the second largest foreign donor
25:05behind the United States. Kyiv's having
25:08some problems though getting their own
25:10domestic political order under control.
25:13What can you do to help them because
25:15they are about to run out of money?
25:17>> Let me start recognizing that they have
25:20done a lot. This is a country fifth year
25:23in a war
25:24that collects
25:26in tax revenues 34%
25:30to GDP.
25:32Just imagine how very few countries
25:34collect even
25:36half of this.
25:37>> In the middle of a war.
25:38>> not in a war.
25:40Uh
25:41so we we are standing with Ukraine
25:44because they have proven to be
25:46responsible
25:48partner.
25:49So they earn the financial support they
25:52get.
25:53Uh when I look into this year, it is a
25:55very critical year.
25:57Hopefully peace negotiations would bring
26:01a positive outcome.
26:02With or without that outcome, the
26:05country the country would continue to
26:07need
26:08international support.
26:10And for this reason, we have a new
26:12program for Ukraine.
26:15We are working with Ukraine so they can
26:17continue on this path of reforms that
26:20gives them the credibility
26:23to earn massive financial support uh
26:26from the rest of the world, especially
26:28from Europe.
26:29I can tell you that
26:31I was there in the midst of very cold
26:37winter.
26:38Minus
26:40um
26:410°
26:44Fahrenheit.
26:46And the country is functional.
26:48People get up, they go to work
26:50in a freezing weather.
26:53They show determination
26:58to keep their society strong.
27:03They deserve to be to be supported by
27:06the rest of us.
27:07>> Doctor, there's so many more hot spots
27:08to talk to you about, but I have to
27:10leave it there for today. Thank you.
27:12>> Thank you.

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This page contains the full transcript of Full interview: IMF managing director Kristalina Georgieva by Face the Nation, generated from the public captions YouTube serves with the video. The transcript has 3,792 words across 684 segments, with the original timestamps preserved so you can click any line to jump to that moment in the embedded player.

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