Georgieva: Bold Reforms Needed to Boost Global Growth

(Credit: IMF Photo)

How can we reinvigorate global growth amid limited policy space and heightened uncertainties? This was one “resounding common theme” of the G20 Finance Ministers and Central Bank Governors meetings in Cape Town, according to IMF Managing Director Kristalina Georgieva.

Countries need to contain short-term risks, rebuild fiscal buffers, and embrace bold reforms to boost productivity, noted Georgieva.

She added: “In general, this calls for a pivot toward supply side policies, which means cutting red tape, increasing competition, and encouraging entrepreneurship. We also need better education systems and smart regulation to ensure rapid but safe advances in productivity-enhancing technology, such as AI.”

Pictured: The Managing Director with South African Finance Minister Enoch Godongwana and Governor of the South African Reserve Bank
Kganyago Lesetja.

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ARTIFICIAL INTELLIGENCE

How AI Can Help Both Tax Collectors and Taxpayers

(Credit: Cynthia R. Matonhodze/IMF Photo)

New technologies have the potential to improve the relationship between governments and citizens. Tax portals, customs IT systems, and online services have simplified interactions with public authorities, reduced bureaucratic hurdles, and increased transparency. Now, generative artificial intelligence (GenAI), which opens possibilities that go beyond simple automation, is emerging as the next transformative force, write the IMF’s Thomas Cantens and Herve Tourpe in a new blog.

GenAI carries profound implications, the authors note. Internally, it can help tax and customs officials to focus on analytical and judgment-based roles, allowing them to become oversight specialists and increasing their productivity. Externally, it can reduce the knowledge gap between administrations and taxpayers, aiding in the interpretation of complex provisions, navigating laws, identifying deductions, and even auto-filling forms.

Despite its potential, GenAI also comes with challenges. Issues related to data quality, ethics, privacy concerns and hallucinations (i.e., incorrect results) must be addressed to reinforce and not erode trust, the authors conclude.

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F&D MAGAZINE

The Mysteries of Cities and Economic Growth

(Credit: Chantal Jahchan)

Cities are the nodes on our global lattice of travel and trade. They are the ports of entry for goods, people, ideas—and for viruses. The second of the IMF’s three critical missions is “encouraging the expansion of trade and economic growth.” Given the vital role that cities play in connecting the world, it’s almost impossible to think about the expansion of trade and economic growth without also thinking about cities, write David M. Cutler and Edward Glaeser in the December 2024 issue of F&D magazine.

“It is our belief that improving governance of the world’s cities and reducing the barriers that artificially divide them can help trade expand and economies grow,” the authors write.

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Coming next week: the March 2025 issue of F&D magazine!

Weekly Roundup

STAFF PAPER

Prometheus Unbound: What Makes Fintech Grow?

The rise of financial technologies—fintech—could have transformative effects on the financial landscape, expanding the reach of services beyond the confines of geography and creating new competitive sources of finance for households and firms. But what makes fintech grow, and why do some countries have more financial innovation than others? A new IMF staff paper investigates the emergence and spread of fintech in a diverse panel of 98 countries over the period 2012–2020. The findings reveal that policies and structural reforms can help promote financial innovation and cultivate fintech ventures—particularly by strengthening technological and institutional infrastructures and reducing cybersecurity threats.

STAFF PAPER

Artificial Intelligence and the Philippine Labor Market: Mapping Occupational Exposure and Complementarity

This new IMF staff paper examines the potential impact of recent advancements in AI on the Philippine labor market. The authors find that around one third of workers are highly exposed to AI with around sixty percent of those also rated highly complementary, indicating potential productivity gains; college-educated, young, urban, female, and well-paid workers in the services sector are most exposed. Business process outsourcing (BPO) is identified as the sector with the highest proportion of jobs at risk of displacement. Addressing regulatory gaps, infrastructure needs, and workforce reskilling is crucial to maximize benefits and mitigate negative impacts, the authors conclude.

Asia and the IMF: Resilience through Cooperation – Opening Session

Asia, the engine for global growth over the past decade and an innovation powerhouse, can help contribute to a stronger international monetary system and global financial safety net. This conference in Tokyo will explore policy priorities for Asia and the IMF to secure a stronger and more resilient global economy and hear from Asian thought leaders and policymakers on how the IMF can best serve the region. IMF Managing Director Kristalina Georgieva (via video), together with Japan Finance Minister Katsunobu Kato and Bank of Japan Governor Kazuo Ueda, will open the conference.

Watch the Session Here

Thank you again very much for your interest in the Weekend Read! Be sure to let us know what issues and trends we should have on our radar.