All right, it's sim now for our daily Wall Street Week conversation and the global economy. It's posed for a year of steady growth, but the IMF warrants of headwinds for Europe, partly because of two regional wars. Pascal Donahoe, your Group President, joins us now from the IMF World Bank meetings in Washington, along of course with Wall Street Weeks David Weston. David, a great conversation to kick off the IMF Spring meetings.

All right, it's sim now for our daily Wall Street Week conversation and the global economy. It's posed for a year of steady growth, but the IMF warrants of headwinds for Europe, partly because of two regional wars. Pascal Donahoe, your Group President, joins us now from the IMF World Bank meetings in Washington, along of course with Wall Street Weeks David Weston. David, a great conversation to kick off the IMF Spring meetings.

Absolutely, a lot of fiscal demands now in the United States, but also over in Europe. So Pascal, thank you so much for being with us. We just heard from the IMF warning the United States you're borrowing an awful lot of money. How much fiscal headroom does your Eurogroup collection of countries have, because we have the demands that are a parent in Ukraine to try to help Ukraine, we also have the climate change. How much fiscal headroom is there to borrow to address some of these issues.

Absolutely, a lot of fiscal demands now in the United States, but also over in Europe. So Pascal, thank you so much for being with us. We just heard from the IMF warning the United States you're borrowing an awful lot of money. How much fiscal headroom does your Eurogroup collection of countries have, because we have the demands that are a parent in Ukraine to try to help Ukraine, we also have the climate change. How much fiscal headroom is there to borrow to address some of these issues.

So that's some, but the truth of it is there needs to be more, and we as governments in the European Union, face the many, many challenges of needing to normalize budget policy. But at the same time, we need to find funding to make our economies greener and our country safer. And that is why does such work on the Way Now within the European Union regarding the future of capital markets. And as we speak, David, all of the Prime ministers of the European Union are meeting each other to find ways in which we can accelerate progress on that project, to look at how we can make better use of the private savings in Europe as we begin to normalize budget policy, to invest in the different priorities you've just identified.

So that's some, but the truth of it is there needs to be more, and we as governments in the European Union, face the many, many challenges of needing to normalize budget policy. But at the same time, we need to find funding to make our economies greener and our country safer. And that is why does such work on the Way Now within the European Union regarding the future of capital markets. And as we speak, David, all of the Prime ministers of the European Union are meeting each other to find ways in which we can accelerate progress on that project, to look at how we can make better use of the private savings in Europe as we begin to normalize budget policy, to invest in the different priorities you've just identified.

And part of the conversation, of course, is large borrowing when it comes to defense and when it comes to Ukraine. And before we get to Ukraine, I do want to talk a little bit about defense, because I'm curious what you make of financing Europe's push to ramp up its military capabilities with new common debt.

And part of the conversation, of course, is large borrowing when it comes to defense and when it comes to Ukraine. And before we get to Ukraine, I do want to talk a little bit about defense, because I'm curious what you make of financing Europe's push to ramp up its military capabilities with new common debt.

The debate on the Way Now would regard to us. It's fair to say at the moment that consensus has not yet been achieved regarding that discussion. But I don't think we should lose sight of the progress that Europe is already making and has made with regard to supporting the people of Ukraine, the funding that has been made available to them at the moment, the fifty billion euro package that has been agreed within the European Union to support Ukraine across the medium term, and even changes that are underway now regarding the role and the potential role of the European Investment Bank in the future led by President Clavino, to look at what role they can play in responding back to the defense and the investment needs that are there. So the discussion is under way, but much has already been achieved regarding how we can support the people, the economy and the security of Ukraine.

The debate on the Way Now would regard to us. It's fair to say at the moment that consensus has not yet been achieved regarding that discussion. But I don't think we should lose sight of the progress that Europe is already making and has made with regard to supporting the people of Ukraine, the funding that has been made available to them at the moment, the fifty billion euro package that has been agreed within the European Union to support Ukraine across the medium term, and even changes that are underway now regarding the role and the potential role of the European Investment Bank in the future led by President Clavino, to look at what role they can play in responding back to the defense and the investment needs that are there. So the discussion is under way, but much has already been achieved regarding how we can support the people, the economy and the security of Ukraine.

So you talk about the need to try to tap into the capital markets, do you have a price tag or if not a price tag, sert of aarge for the sorts of funds you think you're going to need over the medium term for the two priorities you identified, climate and security.

So you talk about the need to try to tap into the capital markets, do you have a price tag or if not a price tag, sert of aarge for the sorts of funds you think you're going to need over the medium term for the two priorities you identified, climate and security.

So there's a range of different price tags in relation to a David and the only thing they have in common is they're all measured in the many hundreds of billions of euros per year. The progress that we have made in trying to respond back to the needs that we are discussing is the creation of the next generation EU budgets, which for many of the larger economies within the European Union is worth hundreds of billions of euros over a number of years. That has been funded by new forms of death that is looking to invest into a greener and more digital future for the European Union. But there is still a funding gap, and that is why what we have done within the European Union is try to agree a budget framework for the years ahead that prioritizes capital investment and prioritize suspending in those areas, so that year by year we can reduce that gap and get our growth outlook up as we're getting inflation down.

So there's a range of different price tags in relation to a David and the only thing they have in common is they're all measured in the many hundreds of billions of euros per year. The progress that we have made in trying to respond back to the needs that we are discussing is the creation of the next generation EU budgets, which for many of the larger economies within the European Union is worth hundreds of billions of euros over a number of years. That has been funded by new forms of death that is looking to invest into a greener and more digital future for the European Union. But there is still a funding gap, and that is why what we have done within the European Union is try to agree a budget framework for the years ahead that prioritizes capital investment and prioritize suspending in those areas, so that year by year we can reduce that gap and get our growth outlook up as we're getting inflation down.

I'd love to get a little bit more specific on some of the countries within, of course the region. Let's talk about Friends, and let's talk about Italy and their fiscal situations. Are you concerned at all about their debt and deficit levels.

I'd love to get a little bit more specific on some of the countries within, of course the region. Let's talk about Friends, and let's talk about Italy and their fiscal situations. Are you concerned at all about their debt and deficit levels.

I have absolute confidence in the ability of those countries to manage their death, to manage their public finances. In the COVID era, we had a need to run higher levels of borrowing to tolerate a higher level of death as a share of national income. But those economies led by Minister Georgetti, led by Minister le Mayor, our buddy, and are implementing the plans that are needed to now reduce borrowing, stabilize public death as a share of national income, and get it to a point that it will fall gradually over time. So the euro Area and the members of the euro Area have a public finance profile that I'm very very confident that we can support and back and manage carefully in the time ahead.

I have absolute confidence in the ability of those countries to manage their death, to manage their public finances. In the COVID era, we had a need to run higher levels of borrowing to tolerate a higher level of death as a share of national income. But those economies led by Minister Georgetti, led by Minister le Mayor, our buddy, and are implementing the plans that are needed to now reduce borrowing, stabilize public death as a share of national income, and get it to a point that it will fall gradually over time. So the euro Area and the members of the euro Area have a public finance profile that I'm very very confident that we can support and back and manage carefully in the time ahead.

You mentioned growth, and you mentioned trying to make sure we get our arms around inflation, keep our arms of inflation. Right now, it's perceived at least that the Europe may be lagging a little bit behind the US economy in terms of competitiveness and in growth. What can the countries over there do fiscally They could actually spur that growth for the longer term.

You mentioned growth, and you mentioned trying to make sure we get our arms around inflation, keep our arms of inflation. Right now, it's perceived at least that the Europe may be lagging a little bit behind the US economy in terms of competitiveness and in growth. What can the countries over there do fiscally They could actually spur that growth for the longer term.

So I think it is a fair critique, it's one that we need to consider. While we have been successful in getting inflation down, if you look at the growth outlook that we have for this year, it's probably going to be around zero point eight percent. It will be ahead of one percent for next year. So much of that, unfortunately is explained by the economic effects of the war on the people of Ukraine, which Europe is right beside, but we need to look at how we can approve that growth outlook. So I would pick two particular priorities. I would pick the implementation of the EU budget that I refer to a moment ago, that is looking to provide new forms of funding in return for structural change within economies funded by new forms of debt, and the implementation of that in a credible way in the years ahead is a really big priority that we're all committed to delivering. And then secondly, at a national level, David, they'll be trying to get that balance right between reducing current expenditure as the economic conditions allow us to do, but prioritizing capital investment and investing in those projects that can help Europe in the years ahead. And that's very much a national balancing act that all my Finance minister colleagues at the moment are working on for implementing in twenty twenty four, but thinking ahead to twenty twenty five regarding how he deals and let's talk.

So I think it is a fair critique, it's one that we need to consider. While we have been successful in getting inflation down, if you look at the growth outlook that we have for this year, it's probably going to be around zero point eight percent. It will be ahead of one percent for next year. So much of that, unfortunately is explained by the economic effects of the war on the people of Ukraine, which Europe is right beside, but we need to look at how we can approve that growth outlook. So I would pick two particular priorities. I would pick the implementation of the EU budget that I refer to a moment ago, that is looking to provide new forms of funding in return for structural change within economies funded by new forms of debt, and the implementation of that in a credible way in the years ahead is a really big priority that we're all committed to delivering. And then secondly, at a national level, David, they'll be trying to get that balance right between reducing current expenditure as the economic conditions allow us to do, but prioritizing capital investment and investing in those projects that can help Europe in the years ahead. And that's very much a national balancing act that all my Finance minister colleagues at the moment are working on for implementing in twenty twenty four, but thinking ahead to twenty twenty five regarding how he deals and let's talk.

About new forms of debt and what form that debt might actually take. Because Steve and I were talking a little bit before the segment about the concept of a europe And forgive me if this is a silly question, but of course there's a common currency. Is there something in the debt market that is similar to the Euro? Has that actually come to fruition yet? And if so, if it has, I mean, why isn't it as ubiquitous as the as the Euro.

About new forms of debt and what form that debt might actually take. Because Steve and I were talking a little bit before the segment about the concept of a europe And forgive me if this is a silly question, but of course there's a common currency. Is there something in the debt market that is similar to the Euro? Has that actually come to fruition yet? And if so, if it has, I mean, why isn't it as ubiquitous as the as the Euro.

So it's very much underway in terms of new forms of debt. And again going back to the discussion that we've had regarding the European Union budgets, we now have the European Union as a issuer of debt to the markets to fund many of these plans that are underway. And what we need to continue to do with build up confidence. In that build up confidence, and that is a form of death. I think it's been really well received by the markets already. And then in terms of your point then regarding the gap between our currency and these forms of death, I suppose really the key difference is that we've had a Euro that's now been around for a number of decades, that is very very well established as a global reserve currency, whereas these new forms of death have really only happened very very recently, and the European Union wants to make the death that we've already issued this success and as I said, there's a big debate on the way but not yet agreement regarding whether that could play a different role in the future.

So it's very much underway in terms of new forms of debt. And again going back to the discussion that we've had regarding the European Union budgets, we now have the European Union as a issuer of debt to the markets to fund many of these plans that are underway. And what we need to continue to do with build up confidence. In that build up confidence, and that is a form of death. I think it's been really well received by the markets already. And then in terms of your point then regarding the gap between our currency and these forms of death, I suppose really the key difference is that we've had a Euro that's now been around for a number of decades, that is very very well established as a global reserve currency, whereas these new forms of death have really only happened very very recently, and the European Union wants to make the death that we've already issued this success and as I said, there's a big debate on the way but not yet agreement regarding whether that could play a different role in the future.

Yeah, it's a good point to end on that. The eurocurrency much more mature, of course than the eurobond. Pascal really enjoyed this conversation.

Yeah, it's a good point to end on that. The eurocurrency much more mature, of course than the eurobond. Pascal really enjoyed this conversation.

Thanks, thank you very much.

Thanks, thank you very much.

Our thanks to your Group President, Pascal Donahoe

Our thanks to your Group President, Pascal Donahoe