First On CNBC: CNBC Transcript: IMF Managing Director Kristalina Georgieva Speaks with CNBC’s Sara Eisen Today

WHEN: Today, Wednesday, March 4, 2020

WHERE: CNBC’s “Squawk Alley

The following is the unofficial transcript of a FIRST ON CNBC interview with IMF Managing Director Kristalina Georgieva and CNBC’s Sara Eisen on CNBC’s “Squawk Alley” (M-F 9AM – 11AM) today, Wednesday, March 4th. The following is a link to video of the interview on

All references must be sourced to CNBC.

SARA EISEN: Good morning, guys. And welcome to Kristalina Georgieva, the Managing Director of the IMF. Good to see you.

KRISTALINA GEORGIEVA: Well, thank you for having me, Sara.

SARA EISEN: Fresh off that news conference, where you and World Bank President David Malpass talked about a coordinated response to Coronavirus. You said that there’s a serious threat here to people and economic growth. What are you at the IMF doing about it?

KRISTALINA GEORGIEVA: At the IMF, we have mobilized our financial capacity to respond to this emergency in a very fast manner. We have about $50 billion that are available to low-income countries and to emerging market economies that can get access to this money without a program with the fund—in other words, immediately. We are also bringing together the membership for coordinated global response. We recognize the criticality to pay attention to the weaker countries, those were health systems are not tuned to respond to that emergency. And we are mobilizing with the World Bank to create the global coordination mechanism, so as we provide funding to buy the necessary protective equipment and give a chance to poor countries to be better equipped, that production capacity to come up with the masks and the respirators is geared up. So, the -- the demand that the supply can match.

SARA EISEN: So, I just want to underscore this $50 billion. Because, this is new. You are breaking this with us.


SARA EISEN: So, tell us exactly where that money is going, who has asked for it, if any countries have asked for it, and how it will be received?

KRISTALINA GEORGIEVA: So, at this point, the $40 billion is for countries that are middle income, and they can approach us and receive the funding immediately. More important is the $10 billion that are accessible for low-income countries. Because most of this money is interest-free. We have signaled to the membership and what we are doing right now is reviewing country by country what are the financial needs and engaging with these countries to make sure that they are aware of this resource and we can immediately respond to them. So, we are in an early stage of engagement. But I can assure you that we will attack very quickly as requests come. What the countries would use the money for, we would like very much to see them prioritizing first and foremost, urgently beefing up their health service capacity so lives are saved, and suffering is reduced. And secondly, to use it for fiscal measures that are well targeted to households, businesses that are most directly impacted by the crisis.

SARA EISEN: Do you think we need to see those kind of fiscal measures, stimulus here in the United States?

KRISTALINA GEORGIEVA: We believe that all countries should look seriously into the urgency to beef up health systems response. And, yes, that would be money very well spent everywhere. And we also think it is now the time to put in place precautionary measures should the outbreak become more severe. In other words, do we have credit lines for SMEs? Are we thinking of funding workers that cannot go to work because their kids are at home? And these are not measures that we should come with later, we should be prepared now.

SARA EISEN: In the meantime, we’ve got some monetary stimulus in the form of that surprise double rate cut from the Federal Reserve. There’s a big debate, Kristalina, about whether it was the right time, whether it was the right move and whether it can actually accomplish anything, when what we really need is treatment, vaccines, testing for this virus. Where do you come down on that debate?

KRISTALINA GEORGIEVA: Where we come down is in terms of how we set priorities. It goes in the following order. First, health systems and response. Second, fiscal measures to ease the impact on businesses and households. Make sure that we are thinking about it now. Third, liquidity. We do want to be sure that credit lines will be available when they are needed. And in that sense, this is the list of priorities we have outlined today to the whole membership.

SARA EISEN: What should the ECB do? I mean, if you’re talking about global coordinated action and the Fed already made a move to cut rates, what would your advice be for your predecessor Christine Lagarde who is now running that institution?

KRISTALINA GEORGIEVA: Well, Christine has her hands on the wheel very firmly at the ECB. And she actually brought up today at the call a very important issue, which is make sure that you have contingency planning for the functioning of the financial system in case people stay home. She is looking very carefully at the developments in the Euro-zone. And I am confident that as the situation evolves, she will make the right call.

SARA EISEN: What kind of depth of economic weakness are you looking at? You told reporters in the news conference that 2020 looks to be weaker than 2019. How deep will this go?

KRISTALINA GEORGIEVA: Well, what we look at are a more benign scenario and a more adverse scenario. In a more benign scenario, the outbreak would be relatively short lived, and the impact would be felt primarily first quarter, second quarter, followed by recovery. In a more adverse scenario, the outbreak would be a more profound. It would go beyond the countries today. We have 75 countries impacted. It would become truly global. There would be more retrenchment, and in a country the impact would look more like China than not. So, where we would lend between those two scenarios, we are looking very carefully at the data, and of course, listening to the epidemiologists to get a handle on what projection we should make. But there are so many things in between those to the more benign and really adverse, in which we would have a longer drop in growth and a slower recovery, versus a shorter drop and a faster recovery. We do need to exercise some -- and accumulate enough bottom-up data from countries, and, source more information from the experts, from the health community. Meanwhile, though, preparedness and action are absolutely critical. It’s better to do more than not enough. And focus has to be on people.

SARA EISEN: And coordination, which is a big point of the IMF always. It’s a big point you’ve made with the World Bank, with the finance ministers, the central bankers. Where it’s not happening is really with the leaders. I mean, we haven’t seen, for instance, President Trump and President Xi in some sort of public way addressing this crisis together. Why is that not happening and does that concern you?

KRISTALINA GEORGIEVA: Well, I am actually concentrating more on what is happening. And what is happening is this morning we had all ministers and Central Bank governors united and with consensus on coordinated action. And I do believe that what we need to all focus on is to actually deliver on this urgency. Keep our eyes on that ball.

SARA EISEN: Finally, you guys have a pretty good handle on what’s going on in China. I know you have the lines of communication open there. What’s your expectation as to when we’re going to see those factories and supply chains back online in any kind of normal way?

KRISTALINA GEORGIEVA: Well, there is some good news coming from China in that regard. Capacity is up to around 60%. We heard today from the Governor Yi Gang that they are aiming by the end of the month to go up to 90%. Of course, we have to caveat that, subject to no revival of the epidemic as factories reopen. But at this point, the news from China is, there is a stepping up in production. There will be a negative impact on this year’s growth for China. The leadership there knows it. It is in our expectation. But a stepping up in China, good for China, good for the rest of the world.

SARA EISEN: And finally, I know it’s early to assess the damage economically, Kristalina, but do you think this is the sort of thing that could tip the United States into recession, if the virus continues to spread here?

KRISTALINA GEORGIEVA: At this point, what we see are two pieces of relatively comforting news. One, the financial system is holding. We are not seeing a major risk. So, all the investment we’ve done over the last ten years is paying off. And, two, there is quite substantial gearing up on measures so we can slow down the impact and reduce it. And that is, I think, our eyes have to be on what can we do to prevent a more adverse impact. And a big part of it is actually confidence building by communicating clearly where we are, what we know, what we don’t know. And act on that basis. Lean forward.

SARA EISEN: Well, we appreciate you doing that here with us today. Kristalina Georgieva, the IMF Managing Director, announcing, Carl, that big rescue package, she said in the spirits of doing what we can with the information we know, $50 billion.

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