Pierre Gramegna in Washington under the banner of reinvigorated multilateralism and sustainable finance
In view of the pandemic situation, these meetings have this year taken a hybrid form. Historically attached to multilateralism, and very involved in these international organizations, Luxembourg was one of the few countries outside the members of the G20 to participate physically.
Pierre Gramegna thus co-chaired with Kristalina Georgieva, Managing Director of the IMF, and Tharman Shanmugaratnam, Principal Minister and Minister Coordinating Social Policies of Singapore, a round table on options to further amplify the impact of the historic allocation of rights of special drawing (SDR) of 650 billion dollars which took effect in August 2021, with the support of Luxembourg. Indeed, with a view to supporting the global economic recovery and addressing medium and long-term challenges, the roundtable participants discussed a possible transfer of part of their SDRs, if necessary by through a fund for resilience and sustainability, to vulnerable countries. SDRs are part of the official change reserves of IMF member countries and were created in 1969 to improve the stability of the international monetary system by maintaining additional liquidity.
During his speech, Pierre Gramegna insisted on the need for good cooperation between the IMF and the World Bank, in order to ensure the coherence of the action of the two organizations in this area. The Minister of Finance also recalled that Luxembourg is one of the few countries which invest 1% of their GNI (gross national income) in development aid and assured the members of the IMF of Luxembourg’s support for this new initiative, which aims to provide the most needy countries with the necessary liquidity to face climate change and possible future crises.
On the sidelines of the plenary meetings, Pierre Gramegna also had a working meeting with Alfred Kammer, Director of the European Department at the IMF. The two interlocutors discussed the world economic situation, in particular with regard to the evolution of the health situation and developments relating to inflation. They also discussed the Luxembourg experience linked to the issuance of the sustainable sovereign loan issued in September 2021, as well as the pioneering role of the Luxembourg Green Exchange at the international level. In addition, they took stock of the challenges associated with rising house prices, found all over Europe. Finally, Pierre Gramegna and Alfred Kammer had an exchange of views on a possible adaptation of the rules of the Stability and Growth Pact with regard to the challenges linked to exiting the crisis. On this subject, Pierre Gramegna pleaded in favor of an approach aiming to consider differently the expenses related to the investments, in particular in the climate transition on the one hand, and the operating costs of the currents on the other.
During an interview with Paul Hilbers, Executive Director of the IMF, the two interlocutors discussed the European recovery plan and Luxembourg’s efforts in favor of climate finance. In this context, Paul Hilbers praised Luxembourg’s commitment to multilateralism and the IMF’s action in managing the economic consequences of the crisis.
In the same vein, the Minister of Finance met Emil Stavrev, Head of Mission to the IMF, to outline the main thrusts of Luxembourg’s 2022 draft budget, perfectly in line with the Fund’s recommendations to support the end of the crisis. The two interlocutors also had an exchange on the evolution of international taxation, in particular with regard to the recent agreement reached at the level of the OECD on a minimum taxation. Pierre Gramegna once again underlined Luxembourg’s support for this historic agreement, which will allow the establishment of common rules (“level playing field”) at the global level.
At the World Bank, Pierre Gramegna met Axel Van Trotsenburg, Director of Operations, to discuss the growing role of climate finance in achieving the United Nations Sustainable Development Goals (SDGs). In this regard, Axel van Trotsenburg underlined the recognized expertise of the Luxembourg financial center in this area, illustrated by the fact that the World Bank’s green loans are listed on the Luxembourg Green Exchange of the Luxembourg Stock Exchange. There emerged from the discussion a broad convergence of views on the fact that the climate crisis can only be solved by mobilizing financial resources of unprecedented volume, by involving the private sector and by creating a credible and viable market. for sustainable finance instruments. In this regard, Pierre Gramegna observed that the recent green loan from the European Commission, with a record volume of 12 billion euros, was issued under Luxembourg law and will also be listed on the Luxembourg Stock Exchange.
The Minister of Finance also had a meeting with his Turkish counterpart, Mr. Elvan Lüfti, to discuss relations between our two countries, as well as ways to further strengthen ties between Turkey and the European Union. As Turkey recently joined the Paris Agreement, the two counterparts also discussed the importance of sustainable finance for achieving the dual climate and digital transition, as well as the positive contribution that the fund industry has made. Luxembourg investment can contribute in this area. Capitalizing on the expertise acquired by Luxembourg in the field of sustainable finance, in particular through the recent issuance of the sustainable sovereign loan, the two counterparts agreed to a closer collaboration and an exchange of good practices in matter.
Pierre Gramgna also took advantage of his visit to Washington to strengthen ties with the United States. He continued the dialogue started earlier this month at the OECD with José W. Fernandez, United States Under Secretary for Economic Growth, Energy and the Environment, to explore avenues for cumulative collaboration between our two countries, particularly in the areas of investment and the fight against climate change.
Pierre Gramegna comments: “The annual meetings of the IMF and the World Bank are a privileged moment to discuss at the highest level on the current challenges for the world economy and the international financial system. have resumed their historic role in multilateral organizations and are now fully engaged in the fight against climate change. humanity. In this context, Luxembourg fully assumes its responsibilities. Through the recognized expertise of our financial center in the area of sustainable finance, Luxembourg has significant leverage, making it possible to make a tangible contribution to the financing of the transition to a carbon neutral economy, aware that these efforts will only be effective if all countries contribute, i am pleased that luxembourg has decided to participate in the additional allocation of special drawing rights (SDRs) to the tune of 650 billion dollars, benefiting in particular the least developed countries. “
After Washington, the Minister of Finance will travel on a financial mission to New York, where he will meet with major players in the financial sector to exchange views on current trends and to promote Luxembourg as a leading international and diversified financial center.
Communicated by the Ministry of Finance