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Dear Colleague, welcome to the October 23 briefing from the Annual Meetings
In this Daily Briefing, we spotlight global public debt, discuss how to make cross-border payments more inclusive, learn about green jobs, explore the benefits of e-money, and much more as the IMF-World Bank Annual Meetings continue.
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(Credit: IMF Photo/Jonathan Ernst)
“Global public debt is very high, rising and risky.” That is the main message of the Fall 2024 Fiscal Monitor, as summarized by Fiscal Affairs director Vítor Gaspar at a press briefing during the Annual Meetings. Global public debt is projected to go above $100 trillion this year. At the current pace, the global debt to GDP ratio will approach 100% by the end of the decade, rising above the pandemic peak.
However, the headline number masks considerable diversity, and Gaspar highlighted three main groups: Public debt is higher and projected to grow faster than pre-pandemic trends in about one third of the countries, but which represent about 70% of global GDP. This group includes the United States, China, some of leading advanced economies (UK, Italy, France) and large emerging markets (Brazil and South Africa). In another one third of the country's public debt is higher, but projected to grow slower or, decline compared with pre-pandemic trends. In the rest of countries, debt is projected to lower.
“Policymakers are now facing a fundamental policy trilemma: to maintain debt sustainability amid very high levels of debt in some countries; to accommodate the spending pressures for climate adaptation, for development goals, for population aging. And at the same time, to garner support that is needed, for reforms”, said Fiscal Affairs deputy director Era Dabla-Norris. “The time is now to pivot towards a gradual, sustained and people-focused fiscal adjustment,” Gaspar added.
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NUMBER OF THE DAY
Global public debt is projected to exceed US$100 trillion in 2024 and will rise over the medium term. Read more in the October 2024 Fiscal Monitor.
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$100 trillion
PUBLIC DEBT
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(Credit: IMF Photo)
ECB president Christine Lagarde was the first to mention the packed room attending the G20 event on The Future of Cross-Border Payments. “It is indicative of how critically important the issue is.” Lagarde shared the stage with a distinguished group of central bank governors from Brazil, Cambodia, Eswatini, Italy, Singapore, South Africa, and UK, plus senior officials from the Bank for International Settlements (BIS), World Bank and IMF.
The conference’s three sessions looked into experiences of interconnecting fast payments systems; the potential uses and risks of new digital platforms; and the implementation of cross-border payment enhancements. “Digital platforms can determine who can transact in them, what can be transacted and in what conditions,” said Tobias Adrian, director of the IMF’s Monetary and Capital Markets department, also noting the importance of Capacity Development to ensure strong implementation.
Many participants concurred that, somewhat paradoxically, technology is not the hardest part of pursuing innovation in payments. Governance issues are often far more complicated: which legal framework applies between two countries; who performs financial integrity checks; who guarantees confidentiality and cyber security. “Technology is not a big issue,” said Bank of Italy’s governor Fabio Panetta.
“The future of the global payments system should be faster, safer and more inclusive,” said BIS General Manager Agustín Carstens, in recorded remarks.
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(Credit: IMF Photo)
At the Climate Voices: Green Jobs and the Future of Work for Women and Men panel, leaders discussed strategies to a just transition in the labor force to the green sector. The Fund’s Stefania Fabrizio highlighted gender disparity in green jobs, noting that 70% of energy sector jobs are held by men, and globally, two-thirds of green jobs are also male-dominated. Ireland Minister of Finance Jack Chambers shared his country’s success in creating national policy that engages youth and supports STEM education programs that cultivates curiosity, translating in a more engaged labor force. Chile Minister of Finance Advisor Carola Moreno showcased her country’s innovative gender-climate bonds that incentivize emissions reduction while integrating gender equality in the workforce. Stefano Scarpetta of the OECD stressed the importance of policy-driven green transitions and the need to avoid siloed approaches to topics like climate, gender, and technology (AI). The panel, moderated by the IMF’s Antonio Spilimbergo, guided the conversation on the benefits of addressing gender in green jobs.
Moderated by CNBC’s Karen Tso, at the Climate Voices: This Critical Decade—An Update on Global Mitigation Policy event, climate finance took center stage. COP29 President-Designate Mukhtar Babayev spoke on Azerbaijan’s role in working with previous COP hosts Brazil and UAE to create a forum to motivate financial system reform. While the Loss and Damage Fund (World Bank) and the Resilience and Sustainability Trust (IMF) are positives to report in Baku, UNFCC Executive Secretary Simon Stiell warned of the gap between current efforts and Paris Agreement targets, reiterating that “finance is focus and the enabler of action” and “much more needs to be done.” IMF Deputy Managing Director Bo Li highlighted the Fund’s role in implementing climate into its core services. He also stressed that “robust carbon pricing should be the center of mitigation policy.” The panel also discussed the role for carbon markets, private sector involvement, and technology diffusion to close the ambition gap.
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 Why Women Risk Losing Out in Shift to Green Jobs
Men hold about 70 percent of the world’s polluting jobs, so one might think that they have most to lose from the transition to cleaner energy. After all, they risk finding themselves out of work as countries close down dirty industries in a push to decarbonize and reach net-zero emission targets. Yet our analysis shows that women are also at risk of losing out over the course of the transition. That’s because too few women study the science, technology, engineering, and mathematics (STEM) subjects that are vital to the green jobs of the future.
Women are much more underrepresented in green jobs, which improve environmental sustainability or reduce greenhouse gas emissions, than in polluting jobs, those in industries with per-worker emissions in the top five percent of polluters. For example, just 6 percent of women who work in advanced economies hold green jobs, compared to over 20 percent of working men. Green jobs employ an even lower share of women in emerging market and developing economies.
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(Credit: IMF Photo/Lewis Joly)
Digital payments, driven by electronic money (e-money) and fast payments, are growing rapidly—especially in emerging markets—and transforming financial services along the way. Almost 2 billion users of e-money spend about 1.4 trillion dollars annually, deepening financial inclusion but also creating challenges for regulators, according to a panel discussing digital payments and capacity development on Tuesday.
Gita Gopinath, IMF First Deputy Managing Director, said there are “tremendous benefits” to the growth in e-money for payments, including improved financial inclusion. Gopinath added that the Fund wants to see innovation along with financial stability. She highlighted capacity development efforts to lower related risks, including regional training workshops on fintech regulation and supervision.
According to IMF capacity development head Dominique Desruelle, these risks include digital payments challenges, which may particularly affect countries where e-money institutions have grown “to a systemic scale and have become a crucial, if not the sole, access point to the financial system for many customers.”
Trinidad and Tobago’s central bank governor Alvin Hilaire, Guatemalan central bank governor Alvaro Gonzalez Ricci, and Sophie Sirtaine, CEO of the Consultative Group to Assist the Poor, shared their perspectives, commenting that e-money had greatly accelerated during the pandemic. “We found the world was changing,” Hilaire remarked, adding his appreciation for the “excellent” Fund engagement on this topic.
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(Credit: IMF Photo/Tangyu Zhang)
In a conversation moderated by Rodrigo Valdés, Director of the Western Hemisphere Department, Roger Madrigal, President of the Central Bank of Costa Rica, talked about the country's very strong economic performance in recent years despite the multiple external shocks. He showcased the achievements under the Extended Fund Facility and Resilience and Sustainability Facility (RSF) arrangements. "These efforts are helping to reshape Costa Rica's economy by maintaining a low inflation rate and robust real GDP growth while also advancing our reform agenda, including climate," said Governor Madrigal. Notably, Costa Rica is the first member to complete an RSF arrangement.
Additionally, Governor Madrigal highlighted the country's experience with the centralized national digital payment system (SINPE) developed in the 1990s. This system is now utilized by over 90 percent of the population aged 15 and older. SINPE has enabled Costa Rica to reduce transaction costs, improve efficiency, and achieve a high degree of financial inclusion.
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 Tune in for a conversation with Barbados Prime Minister Mia Mottley, who discusses bold strategies to tackle the pressing issue of debt management and climate change. And Ghana’s Finance Minister Mohammed Amin Adam addresses the challenges of handling debt in low-income countries. Today’s show provides a deep dive into transformative economic reforms.
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(Credit: IMF Photo/Jonathan Ernst)
“Ukraine’s central bank needs to operate under any conditions or circumstances” stated governor Andriy Pyshnyy in a conversation with Alfred Kammer, the Director of the European Department at the International Monetary Fund. As a result of Russia’s invasion in February 2022, Ukraine lost 20% of its territory, 30% of GDP, and saw 16 millions of its population displaced. Authorities had to impose restrictions on capital flows and cash withdrawals, fostering cashless payments at the same time to guarantee that citizens have access to their savings. Central bank provided $12 billions of monetary finance to aid the state budget.
The inflow of international financial aid from mid-2022 and approval of the Extended Fund Facility with the IMF in early 2023 allowed for a gradual normalization: domestic debt market was reassumed, some restrictions on foreign currency exchange were lifted, and inflation fell from over 20% in 2022 to below 5% in 2024.
Nowadays, the National Bank of Ukraine needs to foster stable relations with foreign partners and stakeholders within the country. “We want to build the most inclusive financial system in the world”, Pyshnyy remarked, “We are ready to share our experience so that you can make your contingency plans more realistic.”
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A full 25 percent of the IMF’s capacity development efforts are focused on fragile and conflict-affected states, Franck Bousquet, deputy director of the IMF’s Institute for Capacity Development, told a seminar today. Two of those countries—Iraq and Yemen—were highlighted in the session.
Abdulqader Ameen from Yemen’s ministry of finance said that technical assistance and training have helped the country produce key macroeconomic statistics from scratch to help unlock external financing and debt relief. The IMF’s Bruno Rocha highlighted the close collaboration with country authorities in Yemen, staff at HQ, and METAC, the IMF’s capacity development center in the region. “Be ready to adapt—and adapt regularly,” he added.
The IMF’s Yurii Sholomytsky emphasized the importance of collaboration and creativity to work through challenges, noting that “Our commitment to capacity development remains strong, as it does for our counterparts.”
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