Luxembourg Pledges €9m to Support IMF Technical Assistance Trust Funds

From Tuesday 11 to Friday 14 April 2023, Luxembourg's Minister of Finance, Yuriko Backes, participated in the Spring Meetings of the International Monetary Fund (IMF) and the World Bank (WB) in Washington, DC in the United States (US).

On the agenda were the subjects of the indebtedness of developing countries, sluggish growth that is slowing down economic activity, the evolution of inflation, as well as financial stability and international cooperation.

Minister Backes took part in a meeting between IMF Managing Director Kristalina Georgieva and European political decision-makers. During these exchanges, particular attention was paid to the risks of fragmentation of the global economy, as well as its possible implications for financial stability and the green transition.

These same subjects were on the agenda at the traditional reception of the presidents of the main multilateral development banks at the Embassy of Luxembourg in Washington. This was the first edition of this event held after the COVID-19 pandemic. A second reception, co-organised with Spain's Minister of Finance, Nadia Calviño, brought together a dozen female ministers of finance and leaders of international organisations at the Embassy and was placed under the sign of the promotion of equality between women and men.

Minister Backes stated: "The challenges facing the world in terms of energy, food and climate, as well as inflation, are still relevant. We must avoid the fragmentation of our globalised economies. Thus, the international community absolutely must show solidarity and further strengthen cooperation at all levels. In this spirit, Luxembourg firmly reiterates its commitment to the multilateral system."

On the initiative of the Swedish Presidency of the Council of the European Union, European finance ministers met the candidate nominated by the US for the presidency of the World Bank, Ajay Banga. Minister Backes encouraged the new leader to make further progress in the areas of gender equality and private sector engagement. She also stressed that the fight against climate change cannot wait any longer.

During a meeting with IMF Deputy Managing Director Gita Gopinath, the IMF and Luxembourg signed a new partnership agreement, with the latter pledging €9 million to support the IMF's technical assistance trust funds.

Moreover, Luxembourg's Finance Minister and Alfred Kammer, Director of the IMF's European Department, discussed the main findings of the IMF's Article IV mission, as well as economic developments in the European Union and the euro area. Minister Backes focused primarily on the measures taken at the national level in response to the cost of living crisis.

Another subject of discussion during the Luxembourg minister's exchanges with IMF representatives was the evaluation of Luxembourg within the framework of the "Financial Sector Assessment Program" (FSAP). During a meeting with Tobias Adrian, Director of the IMF's Monetary and Capital Markets Department, Minister Backes highlighted the importance that Luxembourg attaches to this exercise, which is expected to provide a complete and in-depth analysis of the resilience of the Luxembourg financial sector.

Minister Backes also participated in an informal meeting on financing the Sustainable Development Goals (SDGs), convened by United Nations Deputy Secretary-General Amina Mohammed, to discuss the financing of the SDGs by the main multilateral development banks.

Moreover, she also met with the IMF's new senior gender adviser, Rishi Goyal, to whom she reiterated Luxembourg's determination to strengthen the IMF's work on gender, as part of the implementation of the IMF's strategy in this area. In the same spirit, Minister Backes spoke with UN Women Deputy Executive Director Anita Bhatia to further deepen their collaboration.

Similarly, Luxembourg's Minister of Finance had meetings with the executive directors of the respective constituents of which the Grand Duchy is a member of the IMF and the World Bank, namely Paul Hilbers and Hayrettin Demircan, in order to take stock of institutional developments.

On the sidelines of the Spring Meetings, Minister Backes and the Vice-President of the International Finance Corporation (IFC), Ramit Nagpal, launched a new online learning tool "Countering Trade-Based Money Laundering", which receives a financial contribution from Luxembourg. Since 2022, Luxembourg's Ministry of Finance has contributed more than €1 million to the implementation of this tool.

Finally, Minister Backes took part in bilateral meetings with some of her counterparts, including finance ministers Arkhom Termpittayapaisith of Thailand, Dr Olavo Avelino Garcia Correia of Cape Verde and Grant Robertson of New Zeeland.