A Biden-backed economic corridor should not leave anyone out

NEW DELHI – The Biden-led Rail-Sea Economic Corridor linking India to the Middle East and Europe should not be an exception and should engage in the spirit of an integrated global economy, IMF Managing Director Kristalina Georgieva has said.

At a time when global geopolitical lines are shifting and supply chains are realigning, US President Joe Biden’s initiative is aimed not only at countering China’s influence in the energy-rich Middle East, but also at Beijing’s decade-long Belt and Road global infrastructure initiative. A still fragmented global economy with limited global trade growth – which now lags global economic growth.

„If trade is to be an engine of growth, we have to create corridors and opportunities,” Georgieva told CNBC’s Martin Choong on the sidelines of the 20-nation summit in New Delhi on Sunday.

„It’s important to do it for everyone’s benefit, not to exclude others,” he said. „In that sense, I would encourage all countries to work together in the spirit of an integrated economy.”

At a leaders’ summit on Saturday, Biden and Indian Prime Minister Narendra Modi announced plans to build a network of rail and sea routes linking India, the European Union and the Middle East nations of Israel, Jordan, Saudi Arabia and the United Arab Emirates. Emirates”A transformative regional investment.”

The agreement underscores not only the growing partnership between India and the US, but also their urgency and determination to persuade the world that they represent the most viable strategic proposition in facilitating the development needs of the Global South.

In fact, this Biden-backed economic corridor would add to existing infrastructure investment for the regions involved. The countries concerned will meet within the next two months to develop and commit to an action plan with relevant timetables, which are not at this stage.

„In a world we have learned from Covid and the [Ukraine] War, supply chains need to be strengthened, they need to be diversified, connectivity is very important,” Georgieva told CNBC in an exclusive interview.

„Investment in infrastructure connectivity is high, there is a platform for trade between countries, which is good for the countries involved, but also good for the global economy because transport links, communication links and trade have positive spillovers,” he said. was added.

Fierce Russian and Chinese objections to references to the protracted war in Ukraine nearly derailed consensus on a joint statement that usually unites G20 member states.

In the Delhi Declaration finally adopted on Saturday, the G20 countries pledged to protect the world’s most vulnerable by promoting equitable growth and promoting macroeconomic and financial stability. Under Modi, India’s one-year presidency of the multilateral gathering of the world’s largest economies focused on elevating the Global South’s place on the G20 agenda.

Multilateral banking reform is one of the issues on the agenda, including the establishment of a global framework for sovereign debt restructuring, particularly for vulnerable developing economies.

The IMF warned that economic recovery after a series of major shocks would be slow and uneven, with medium-term growth prospects the weakest in decades in an environment of stubbornly high inflation, high interest rates and growing fragmentation.

„I call on our members to strengthen the global financial safety net,” Georgieva said separately on Sunday in a press release issued shortly after the G20 summit formally concluded.

„Since the start of the pandemic, the IMF has pumped $1 trillion in reserves and liquidity through lending to nearly 100 countries. [Global Sovereign Debt Roundtable] Allocation; And thanks to our members for helping us reach our goal of sending $100 billion to vulnerable countries,” he added.

The IMF is undergoing its 16th allocation review, which is scheduled to conclude by the end of the year. The Fund conducts these reviews every five years to assess its ability to meet member countries’ financial needs for payments and to adjust members’ allocations to reflect changes in their relative positions in the global economy.

„To make the global economy stronger and more resilient in a world exposed to more shocks, it is essential to reach an agreement by the end of the year to increase the IMF’s allocated resources and secure the resources needed for the Fund’s interest-free support to the poorest countries through the Poverty Reduction and Development Fund,” Georgieva added in the statement.