The IMF, International Monetary Fund, published its 2024 annual report last Friday, which focuses on “Resilience and Adaptation of the world in a Period of Global Change”.
In a long introduction, its Director General Kristalina Georgieva describes the current state of the global economy as “contrasted”, and adds that although inflation has fallen again, thanks to the concerted efforts of central banks, “large disparities persist at across the world”, and that “the medium-term growth prospects, well below the historical average of 3.8%, are more worrying”. And, therefore, that “having slower growth, combined with high levels of state debt at high interest rates, reduces the resources available to finance public services or make essential investments”.
According to Ms. Georgieva, the observation of “worsening geoeconomic fragmentation threatens to increase global economic disparities”. And, “the global economic architecture, which made it possible to lift 1.5 billion people out of poverty, is today under severe test”, because global growth would only be around 1.2 percentage points. by 2030.
To address these difficulties, the IMF, over the past year, adopted the 16th general review of quotas to achieve the financing objectives of the trust fund for poverty reduction and growth. He also set up a global round table on sovereign debt which has already met twice and created a 25th seat on the board, in favor of African countries. This, while focusing daily on its services in terms of monitoring, advice, loans and capacity development of member countries.
The first lies in the resilience of the global economy post-pandemic. The IMF report highlights that the global economy has been rocked by successive crises, including the COVID-19 pandemic, the war in Ukraine, and persistent global inflation. Nevertheless, the resilience mechanisms put in place in several countries have made it possible to mitigate the impacts of these crises. Concerted efforts by central banks across the world have brought inflation back to levels closer to their targets after peaking in mid-2022.
Despite signs of recovery, global economic growth remains worrying in the medium term. The IMF forecasts growth of 3.1% in 2029, one of the weakest forecasts in recent decades, far from the historical average of 3.8%. This slowdown in economic growth has direct implications for poverty reduction and job creation, particularly in low-income countries.
Global inflation has led to unprecedented synchronization of monetary policies across the world. These adjustments were not without consequences, because most countries went through this period with high levels of public debt, which put public budgets in difficulty.
Emerging markets and low-income countries have been the most affected, suffering the combined effects of rising interest rates, inflation and the deterioration of their reserve levels. The IMF stresses that these countries will need increased assistance to avoid falling further behind in the march towards global income convergence.
The IMF report also highlights climate and technological disruption as major transformative forces that require collective action. He sees climate change as a threat not only to macroeconomic stability but also to the long-term prosperity of the global economy. Similarly, the emergence of digital technologies, particularly artificial intelligence (AI), could either drive faster global growth or exacerbate inequality by replacing some jobs, particularly in the most vulnerable sectors.
IMF report: Focus on Morocco
The 2024 IMF report places an important focus on Morocco, host country of the annual meetings of the IMF and the World Bank, held in Marrakech in October 2023.
He specifies that Morocco is the first beneficiary of the Resilience and Sustainability Facility (FRD) which consists of significant assistance from the IMF. This mechanism, which aims to support structural reforms in countries facing long-term macroeconomic risks, enabled Morocco to obtain financing of approximately 1 billion SDRs (or approximately $1.32 billion). These funds are intended to strengthen Morocco’s resilience in the face of economic and climatic challenges, and support its efforts to carry out sustainable economic reforms.
Better yet, the IMF in its report praises Moroccan leadership in international cooperation, considering that the country played a leading role during the Annual Meetings in Marrakech, being at the center of discussions on global governance, and the adoption of the “Marrakech Principles”, a set of guidelines aimed at promoting stronger global cooperation in the face of challenges such as climate change, poverty, and economic instability.
The IMF considers that our country has also shown its commitment to multilateralism by supporting the increase in IMF quotas and strengthening cooperation with institutions such as the World Bank. Thanks to these efforts, Morocco has positioned itself as a key player in promoting international cooperation in economic stability and sustainable development, but also financial governance, social inclusion, and the fight against poverty.
In this context, the IMF must continue to be a Pillar of Stability and Growth through its initial missions but must also innovate. Thus, through its economic surveillance and assistance mechanisms to member countries, it continues to provide advice to member countries to help them maintain their macroeconomic stability. This is done through periodic consultations with member countries, during which the IMF assesses economic risks and proposes policy adjustments.
To meet the growing needs of countries affected by recent crises, the IMF has deployed several loan mechanisms. These loans aim to stabilize economies and restore sustainable growth, while allowing member countries to rebuild their international reserves.
The IMF has also strengthened its emergency financing tools to respond to the food and climate crises. The Food Shock Response Funding Window, established to help countries address the global food crisis, provided a total of $1.8 billion to six countries before closing in March 2024.
The report also notes one of the major successes of the past year, the achievement of the financing objectives of the CPP trust fund. This fund, which offers concessional loans to the poorest countries, has received significant contributions from 40 member countries, making it possible to mobilize around $17 billion. This allowed the IMF to continue providing zero-interest financing to its most vulnerable member countries.
The IMF, through its capacity-building programs, helps countries improve their economic institutions and implement effective policies. In 2024, the IMF spent $382 million to provide technical advice and training to finance ministries, central banks, and other key institutions in member countries.
In its 2024 report, the IMF places particular emphasis on governance which was devoted to the Marrakech Assemblies of the IMF and the World Bank, held in Marrakech in October 2023. And which were marked by historic agreements on economic governance world, strengthening cooperation between member countries by adopting the “Marrakech Principles” to encourage global cooperation.
Among the major achievements of these assemblies is the 16th General Review of Quotas, which increased the IMF’s lending capacity by 50% to $943 billion, while reducing its dependence on borrowed resources.
The IMF’s 2024 report concludes with recommendations for future challenges that focus on the need to rebuild global financial reserves, restore public debt sustainability, and promote sustainable growth in the face of global economic disruption.
Challenges that can only be addressed through international cooperation, of which the IMF is a link that is as necessary as it is effective.
Afifa Dassouli
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