Who is she?
Kristalina Georgieva is the current Managing Director of the International Monetary Fund (IMF), an organisation that is comprised of 189 countries who share a common aim of global growth and stability, pioneering international trade, and a reduction in global poverty levels .
Georgieva, who was born in Bulgaria, assumed the position in October 2019, after being the CEO of the World Bank from January 2017 – September 2019, which included 3 months as the interim President . She was also listed as number 15 on Forbes’ list of the Most Powerful Women in 2019 as a result of her extensive work in governance and policy. Some of the previous roles that she has assumed include:
- Vice President for Budget and Human Resources in the European Commission,
- The Commissioner for International Cooperation, Humanitarian Aid, and Crisis Response,
- And she acquired many roles within the World Bank including Environmental Economist, Director for Sustainable Development, and Director of Environment are just a few of the many roles she assumed .
In 2010, the European Voice named Georgieva the “European of the Year”, as well as the “Commissioner of the Year” due to her involvement in responses to crises.
What does she do?
As the Managing Director of the IMF, she holds the most senior position within the organisation and the Articles of Agreement states that the managing director “shall be chief of the operating staff of the Fund and shall conduct, under the direction of the Executive Board, the ordinary business of the Fund. Subject to the general control of the Executive Board, (she) shall be responsible for the organization, appointment, and dismissal of the staff of the Fund” .
The purpose of the Fund, as per the Articles of Agreement is to:
- Promote international monetary cooperation,
- Encourage and expand international trade,
- Encourage international stability between member states,
- Introduce and maintain multilateral payment systems to reduce conflict (e.g. trade wars),
- And offer temporary financial assistance to all member states during times of crises, whilst preventing an over-reliance on external assistance to overcome shortcomings.
As the Managing Director, it is Georgieva’s role to oversee this. Her distinguished policymaking record and leadership skills ensure that she is an ideal candidate for this role and that she can provide a strategic vision for the fund .
As mentioned by Statement of Candidacy, Georgieva outlined that her main goals as Managing Director are :
- To minimise the risk of crises and to act quickly and accordingly should one arise. This is particularly important as crises increase economic instability, which goes against the Fund’s mandate. This economic instability can lead to a loss of value of assets, reduce investment and bank lending, impact consumer spending patterns and increase unemployment which could potentially lead to a recession in the member states.
- To safeguard and protect the Fund’s assets, ensuring that the Fund maintains its financial strength. As the strength of the Fund is dependent on its ability to fulfil its purpose and support its member countries, an inability to do so will weaken relationships between the Fund and its member states and can lead to a potential collapse of the Fund should member states decide to revoke their membership.
- To ensure that the Fund continues to evolve so that it can respond to present and future challenges. The Fund needs to be flexible in order to meet the needs of its member states in a dynamic world economy. Rapid technological advancements, population growth, and increased globalisation are just a few ways in which the globe is constantly shifting and changing, and the Fund must be able to balance this, as well as support member countries through these changes. A key example is the current situation surrounding COVID-19 and the impact that it has had on international trade and how it has halted economic expansion, and the Fund must be equipped to tackle this.
Viewpoints surrounding COVID-19:
As the world shifts through a period of uncertainty due to COVID-19, the IMF is a pivotal factor in ensuring that the global economy can withstand the economic impacts as well as ensure a fast recovery. Some of Georgieva’s viewpoint on COVID-19 include:
- Extreme optimism about the future relationships between member states of the Fund.
As a firm believer of the Fund’s mandate, Georgieva believes that there may be positive social impacts as a result of COVID-19. She states that “despite the bleak outlook – I am hopeful for the future”, expressing that the pandemic has led to more cohesive working amongst member states. Examples of this include richer states offering financial assistance to emerging economies, increased global exportation of human capital, physical capital, and information, as well as an increase in social security measures within individual economies. Despite the expansion of the global economy – as well as individual economies being halted – Georgieva is optimistic about the social changes and social relationships that it has developed .
- Anticipates that emerging markets and developing economies will be hit the worse due to their over-reliance on tourism as well as limited global trading, reducing the number of goods exported.
She states that “countries with stronger macroeconomic fundamentals, social cohesion, and safety nets are likely to experience faster and stronger recoveries” and puts this down to diverse income streams. Due to restricted and prohibited travel patterns, countries, whereby tourism accounts for a massive proportion of their GDP, have been hit the worst. Not only this but with many countries going into lockdown, production and manufacturing have been halted and many countries who rely on the exportation of local produce and goods have also seen a massive hit to their GDP.
Timeline of Events:
Georgieva and COVID-19:
As described, Georgieva has expressed many concerns about the impact of COVID-19 on individual economies and the global economy. But what exactly has the IMF done under her leadership to help mitigate some of the effects of COVID-19?
Georgieva has ensured that employees of the IMF have worked extremely hard to ensure that the Fund can meet its demand (which totals $100bn) in a timely manner, and by the end of May, the Fund had approved financing for around 60 countries .
Georgieva and the other members on the Executive Board have increased access to the Fund’s emergency facilities to enable them to meet its financing demand. By doing so, the Fund can help its member states during times of crisis, without having to develop new programmes which could be costly and time-consuming. Whilst the fund currently has a lending demand of $100bn, Georgieva and the Executive Board have made $250bn available to member states.
Not only this but Georgieva has increased the amount available in the Catastrophe Containment and Relief Trust (CCRT) to $1.4bn to provide immediate debt relief to emerging markets and developing countries who have been adversely affected by the crisis. This is to enable a focus of government spending on healthcare, rather than repaying back their debts.
By increasing access to IMF financing, as well as providing debt relief to countries that require it, Georgieva is enabling these countries to have a smoother and easier transition period through these unprecedented times. The additional financing and debt reliefs enable political leaders to effectively distribute the funds into medical equipment and PPE for staff, encourage steady employment levels if possible, and to enable them to stay afloat should lockdown or curfews be implemented to contain the virus. As the head of the IMF, Georgieva has had a major influence in allowing countries to be relatively stable (as can be) during the COVID-19 pandemic.
Georgieva is also actively looking to “build the bridge to recovery” . She has devised a four-point plan which focuses on four key priorities:
- Continuation of essential containment methods (i.e. lockdowns, curfews etc.),
- Providing financial protection to the economically active sector where possible,
- Protection of the financial sector,
- And having an effective plan in place when lockdowns and curfews are eased.
Georgieva has identified that these are the four key priorities that governments must take when looking to ensure the safety of their citizens, as well as maintaining the economic health of the country. We can see that many countries have adopted this approach, including the UK, to deal with the crisis. With many countries actively adopting and modifying this approach to suit their needs, it is evident that Georgieva has had a major influence in how many governments choose to navigate their way through the crisis.
To conclude, it is evident that Georgieva plays a pivotal role in the health of the global economy. As her role is situated around maintaining this, it means that all her decisions influence the global economy, and this trickles down to influence individual governments and their decision making, which then impacts citizens. This can be seen in many of the actions that have been taking during the COVID-19 pandemic. Many countries, including the UK, have adopted the four-point plan suggested by Georgieva, and many countries have benefited from additional financing and debt relief provided by the IMF. This shows that Georgieva is a key influencer and has a massive part to play during times of crisis.
Economics and Political Science graduate from the University of Birmingham. Currently pursuing a postgraduate degree in Financial Management.