Yuriko at the Annual Meetings of the International Monetary Fund and the World Bank on October 13-15, 2022
Against the background of the political crisis, which has been marked by Russian intervention in Ukraine, a significant increase in inflation, fears about food security and a slowdown in the world economy, it was an opportunity for the minister to reiterate Luxembourg’s determination to meet its obligations. at the multilateral level and to present itself as a reliable partner on the international stage.
Yuriko Backes announced Luxembourg’s intention to participate in the IMF’s new flagship instrument, the Recovery and Resilience Trust, which aims to support vulnerable countries in solving structural problems. In addition, within the framework of the extraordinary meeting of the Eurogroup, Yuriko Backes exchanged views with a number of colleagues in Washington, as well as high-level representatives of international financial institutions. The minister also took the opportunity to sign agreements with the World Bank and the International Finance Corporation (IFC), expanding Luxembourg’s contribution to targeted support programs for developing countries.
On October 13, an extraordinary meeting of the Eurogroup was held in Washington with the participation of the US Treasury Secretary Janet Yellen, where attention was paid to the macroeconomic situation and the impact of the energy crisis on both sides of the Atlantic Ocean. Janet Yellen stressed the importance of pursuing a targeted policy to fight inflation while maintaining strong financial support for Ukraine. In her speech, Yuriko Backes insisted on the importance of transatlantic cooperation, as well as to ensure that the financial support that Ukraine needs has the maximum impact and mobilized resources are directed to where they are most needed. Yuriko Backes also reaffirmed her support for the initiative of the OECD and the G20 to solve the problems related to the establishment of minimum taxation for companies at the global level, emphasizing Luxembourg’s determination in favor of its rapid implementation. .
At the plenary session of the International Monetary and Financial Committee (IMFC), the war in Ukraine and its humanitarian and economic consequences were discussed with the participation of Kristalina Georgiyeva, the executive director of the IMF, Christine Lagarde, the president of the European Central Bank, and Antonio Guterres, the Secretary General of the United Nations. Energy security as well as global recovery strategies and the role of the IMF were discussed in detail.
At the World Bank, Yuriko Backes met with Pablo Saavedra, Vice President for Equitable Development, Finance and Institutions, and later signed a new support agreement with Luxembourg for the Global Tax Program. The purpose of this program is to support advisory services and technical assistance aimed at strengthening tax institutions in developing countries.
The minister also met with Makhtar Diop, executive director of the International Finance Corporation (IFC), discussed joint projects between the IFC and Luxembourg, and also signed a new 4-year partnership agreement. The agreement includes special support for low- and middle-income countries to strengthen corporate and small and medium-sized enterprise governance, develop local capital markets, and combat money laundering and terrorist financing.
Within the framework of the annual meetings, the finance minister met with Ratna Sahay, the IMF’s chief adviser on gender equality. Yuriko Backes welcomed the institution’s new gender equality strategy, stressing the economic importance of reducing inequality between women and men. They also discussed the role of the financial sector in this context, which plays a dual role in promoting diversity within institutions and helping to channel investment to achieve UN Sustainable Development Goal 5. (“Achieving gender equality and empowering all women and girls”).
In an interview with IMF Executive Director Paul Hilbers, the consequences of the energy crisis for Luxembourg were discussed, as well as the measures taken by Luxembourg to mitigate the effects of rising energy prices and support the majority of affected households.
The same concerns were on the agenda of the meeting with Alfred Kammer, director of the IMF’s European department. He recalled the need for targeted and time-bound policies to combat inflationary pressure in Europe, while not jeopardizing the medium-term sustainability of public finances. In this context, the Minister of Finance reviewed the economic and budgetary situation of the Grand Duchy and reiterated Luxembourg’s commitment to keep the level of public debt below 30% of GDP in order to maintain the necessary freedom at all times.
Likewise, Finance Minister Yuriko Backes held a bilateral meeting with IMF Deputy Managing Director Kenji Okamura to discuss the economic situation in Europe and its implications for Luxembourg. The Minister of Finance took the opportunity to announce Luxembourg’s intention to pay 20% of the total allocation of special drawing rights (SDR) for 2020 in favor of the IMF’s new flagship instrument called the “Recovery and Resilience Trust”. This initiative is part of official development assistance. In doing so, Luxembourg becomes the largest per capita contributor to the IMF fund, which aims to provide targeted assistance to low- and middle-income countries and strengthen resilience to external shocks and ensure sustainable development.
The Finance Minister also met with his Indonesian counterpart Sri Mulyani Indrawati. Indonesia currently chairs the G20 and co-chairs the Coalition of Finance Ministers for Climate Action, of which Indonesia’s Finance Minister Luxembourg is a founding member. The two ministers discussed the current geopolitical and macroeconomic situation, the priorities of the G20, as well as the potential for strengthening bilateral relations between Luxembourg and Indonesia in the financial sector, especially in the field of green finance.
Finally, Yuriko Backes, “The world of finance: where are the women?” was part of a high-level IMF panel moderated by Ratna Sahay on the role of women in the financial sector. The participants, including José Viñals, Chairman of Standard Chartered Bank, and Patrick Njoroge, Governor of the Central Bank of Kenya, discussed ways to accelerate gender diversity in finance, the causes of gender gaps in companies and incentives to be implemented. encouraging more women to participate in decision-making roles. In this regard, Yuriko Backes welcomed the IMF’s recent decision to make gender diversity an integral part of its work: “The economic case for gender equality is undeniable: to achieve a sustainable economic recovery, we cannot ignore half the world’s population.”
The Luxembourg delegation also participated in the round table organized by the American Treasury on the topic of “Degradation of Russia’s Military-Industrial Complex”. Luxembourg once again declared its unwavering support for Ukraine and emphasized the amount of assets blocked within the framework of the application of financial sanctions against Russia.
Yuriko Backes comments: “The challenges facing the world today are enormous: together we must face the triple crisis – the energy crisis, the cost of living and the food crisis – without losing sight of the existential threat posed by climate change. This is a powerful reminder of the need to find multilateral solutions to polycrisis global problems. “.
Information was provided by the Ministry of Finance