Georgieva made a statement to the press after the Euro Group meeting in Luxembourg.
Pointing out that the Eurozone economy has shown resilience despite major trade losses with the Russia-Ukraine war, Georgieva said that the Eurozone economy entered a mild technical recession at the beginning of 2023 and that economic activity will only gradually recover.
Georgieva stated that inflation has started to decline from historically high levels, but is still well above the target.
“Uncertainty remains high in the Euro Area as risks are downside for growth and upside for inflation.” Georgieva emphasized that the near-term policy priority is to reduce inflation to the target while maintaining financial stability.
Pointing out the importance of continuing tight monetary policies to keep inflation expectations down, Georgieva said:
“Current economic conditions require a tight fiscal policy stance over 2023-2024, which will reduce overall demand, reduce the upward pressure on interest rates, thereby helping to reduce the risk of financial market disruptions.
On the financial stability side, although the banking system appears to be resilient overall, the tightening in financial conditions may reveal vulnerabilities. Supervisors should continue to assess banks’ exposure to interest rate, funding, liquidity and credit risks, including those related to real estate.”
Stressing the importance of strengthening the financial structure, strict implementation of Basel III criteria, and progress in banking and capital markets union in order to ensure financial stability in the Euro Area, Georgieva said that EU countries should also take quick steps on the governance reform prepared to make their public debts sustainable. told.