The David Rubenstein Show: Peer to Peer Conversations

David: This is my kitchen table and also my filing system.

David, voice-over: Over much of the past 3 decades, I've been an investor...

The highest calling of mankind, I've often thought, was private equity.

[Laughter] David, voice-over: And then I started interviewing.

David: I watch your interview show so I know how to do some interviewing.

David, voice-over: I've learned from doing my interviews how leaders make it to the top... Jeff Bezos: I asked him how much he wanted.

He said, "250."

I said, "Fine."

I didn't negotiate with him.

I did no due diligence.

David: I have something I'd like to sell.

David, voice-over: and how they stay there.

David: You don't feel inadequate now because being only the second-wealthiest man in the world, is that right?

[Laughter] The last several decades, one of the most important people in international finance is actually not that well-known to the public.

Her name is Kristalina Georgieva.

She was a senior commissioner of the European Commission.

She was the chief executive of the World Bank, and now she is the managing director of the IMF.

And in that position, she heads an organization whose purpose is to help countries that have financial problems.

Today, because of the pandemic, there are many countries that have financial problems, and there are many people that are calling Kristalina.

You've been a senior commissioner of the European Commission, and now you're the managing director of the IMF.

In getting these positions, was it more difficult because you were a woman or you were from a small country called Bulgaria?

Where was there more prejudice, against being a woman or from Bulgaria?

Kristalina Georgieva: Well, ultimately, I got these jobs, so whatever the prejudice was didn't hold me back.

If I am to make a call on that, I would say being from a small country always requires to work twice as hard as others to prove yourself.

David: When you're growing up in a small country and then behind the Soviet curtain, iron curtain, did you ever think that you would wind up in these kind of positions as a young girl?

Did you imagine anything like this?

Kristalina: David, even today, there are moments when I'm pinching myself.

"Am I the head of the IMF," coming from where I'm coming from?

So no.

David: So many people don't know honestly what the IMF and the World Bank do, so can you explain what they actually do and why they're different and why we need them?

Kristalina: So in the end of the Second World War, in a beautiful place in New Hampshire called Bretton Woods, enlightened leaders came together and said, "We have to help the world to not get into war.

And to do so, we need to help the economy to perform better," and they created these two sister institutions, the IMF, with a mandate on financial stability, growth, and employment, and the World Bank to invest in reconstruction of then-war-torn countries.

David: So the IMF gets its money from its member nations.

Is that right?

Well, how much money, by the way, do you actually have?

Kristalina: So, what we can do is to extend up to $1 trillion of lending to countries in trouble, and it is remarkable that this amount was four times smaller just 10 years ago.

The global financial crisis was like a wake-up call.

"Wait a minute.

We need the IMF to have stronger capabilities," not only to use this money when it is necessary but for the world to know, "We have this money if necessary."

And here we are with this crisis, hitting corners.

So far we have invested $270 billion-- this is about 1/4 of what we have-- and it has been financial lifelines for countries.

David: OK.

So your job at the IMF is to take a country that, let's say, has financial problems, their economy is weak, or they have other kind of crises, and you can help them through that difficult time by lending them money.

And right now, you have about $270-some billion outstanding.

Kristalina: Yep.

David: But do you actually get paid it back?

Kristalina: So, the loans we provide are with very attractive interest rates because it is the money of our members.

They extend to each other a helping hand.

For the poorest members, we charge no interest.

These are soft loans, much softer than the traditional IMF loans.

Countries pay us back.

The poorer countries have longer maturity and longer time to serve their loans to us.

But what matters is not just the money.

What matters is that we work with countries to make them stronger so they can repay with more ease, and that is absolutely paramount for people to know about the Fund.

We are there to help countries to have strong economic fundamentals.

David: Now, there are some people who say that sometimes when the IMF has lent money in the past-- let's say to Argentina or Greece-- the terms are, let's say, draconian.

And there's a lot of, I would say, revulsion in those countries against the harsh IMF terms.

Is that still fair, or those things are in the days of the past?

Kristalina: Well, of course, we learn from experience.

And one of the things we learned is that we have to pay very close attention to the impact of programs on people.

Policies are for people.

Macro decisions have micro consequences.

And we are integrating this much more in the programs we do today.

We think about social spending.

Put a floor.

Don't allow education and health to be so dramatically impacted that human capital of the country is eroded.

And we are much more mindful of other factors for growth, like gender equality.

David: All right.

Let's suppose I'm the president of a country, and I, you know, would like some extra money.

And can I call you up and say, "I'd like to borrow some money"?

And how hard is it to get the money?

How long does it take?

And are people afraid of calling you because their own credit ratings might go down if it's known that they have to borrow money from the IMF?

Kristalina: If you are president of a country in trouble, you better call because if you do not have access to markets-- and some developing countries don't-- then the only way to boost your economy is to rely on the IMF, the World Bank, institutions like us.

Because this is an exogenous shock, it is truly an emergency.

The way we respond is different from what we do when a country isn't in trouble because it mismanaged its economy.

It is the fault of those that have been governing at that time.

What we are asking countries is two questions: One--Please, when you get the money, prioritize your health system and helping the most vulnerable people in the most vulnerable part of the economy.

Two--Show me the receipts.

What did you use the money for?

We are advising countries to spend more but keep the receipts.

We want accountability... David: OK. Kristalina: not just to us, but to the taxpayers in the countries.

And we have advanced already financial lifelines to 75 countries in record short time.

I mean, in this place, when a crisis knocks on the door, we turn on a dime.

We are the world's first responder in crisis.

David: So if I need some money, I call up the World Bank-- the IMF, I call up the IMF, and then I say, "Can I speak to Kristalina?"

And you prefer to be called by your first name, right?

Kristalina: Yes.

David: So somebody calls you.

I'm the president of a country.

I call you up and say, "Kristalina, I need, you know, $100 million."

And you say, "Well, let me have my people look at it."

And they look at it, and they come back and say, "Probably they don't really need the money," or "Not so much."

Do they then call you-- the president of the country calls you to lobby you, or do you get involved in these decisions?

Or do you say, "Look, I have to rely on what the professionals want"?

Kristalina: So we have a very clear policy framework, how much we can lend, because we also don't want to lend more than the country can pay back.

And in this crisis, we increased access level for countries because the shock is so severe, but there is a ceiling.

You cannot go above it.

And we also look at the governance arrangements in the country, which we trace because every year, we engage with countries to take the pulse of their economy.

And we judge, Should we go 50% of their quarter?

That's one decision we can make.

Should we give them 100% of their quarter?

In other words, how much we provide would depend on how sound their systems are and how well they manage their debt levels because, after all, we are lending.

These are not grants.

They have to be paid back.

As for people lobbying me, they know that there are policies because they themselves are owners of the Fund.

They made these policies.

Of course, sometimes a president or prime minister or finance minister would call me to explain the circumstances so I have a better understanding.

You asked me, Do I make these decisions?

No.

They're made by the board of directors of the IMF, by the owners of the IMF.

We make a proposal to the board, and then when it is really a crucial discussion, more complicated, with more uncertainties, I will always chair the board meeting.

I will be there.

David: You ever get turned down with your recommendations?

Kristalina: So far, so good.

David: OK. Kristalina: So far, so good.

Staff is excellent, by the way.

People here in the Fund are fantastic professionals.

When you look from outside, you know they're smart, right?

When you're inside, what I found that really touched me is they have very good hearts.

They really care about people.

David: Now, recently, you have asked the G20 to more or less have a debt-forgiveness situation, so that some people that owe you money wouldn't have to pay it back.

Why did you need to do that?

Kristalina: When we got hit by this crisis, for poor countries, that is devastating twice as much as it is for countries that are wealthier.

Why?

Because one-- they have weak health systems, two--they have very little capacity to respond on their own, and three--a number of them have had high debt levels by that time.

So the economy is in standstill.

If debt service is not put in standstills, these countries have to decide, Do they pay doctors and nurses and save lives or serve their debt?

And that is bad for them, but it is also bad for the rest of the world, because a country in desperate situation falling to pieces turns into a security threat to its neighbors and the rest of the world.

David: So let's talk about your background.

As I mentioned at the outset, you grew up in Bulgaria.

Bulgaria at that time was behind the iron curtain, so it was not a powerful country in the West, and it was actually a small and, I think, relatively poor country.

It turns out you were from a prominent family but not a wealthy family.

Can you tell us a little bit about your background?

Kristalina: So, yes, I was a daughter of ordinary people.

My father was a road engineer.

My mother stayed at home to look after us.

Modest means.

Very happy childhood, very loving parents.

Yes, my family was prominent, but I didn't know that until I was in my 20s.

Why?

Because my father was concerned that if we talk about the revolutionary who was my great-grandfather and the fact that we can trace back our origins five centuries into the past, that may not jell well with the power of the proletariat.

David: So, when you're growing up in Bulgaria in, let's say, the fifties and sixties, were you required to learn Russian?

Kristalina: Of course, of course.

Yes.

David: And English?

Kristalina: No.

Actually, my mother was a Francophone, so she sent me to learn French.

I had some French.

When Gorbachev came to power in the Soviet Union and glasnost and perestroika came to Bulgaria, I was able to apply for a scholarship in the West.

And in six months, I learned English enough to pass to win a British Council Scholarship to go to London School of Economics.

That was incredible to be on the other side of the iron curtain.

And what I found out over there, having access to information, was that my country was broke.

My country was so much deep in debt that I couldn't imagine how it is going to survive.

Sure enough, two years later, Bulgaria, the economy collapsed in Bulgaria, turned the page away from socialism to market economy.

David: And how did you wind up in the Fiji islands?

[Kristalina chuckles] Kristalina: Now, that is a story.

So when I was at London School of Economics, a professor noticed me as somebody who is, well, quite professional.

He then became the dean of economics in University of South Pacific in Suva, in Fiji.

He's sitting there, wondering how he can find highly qualified professors that are willing to work for very little money.

And so brilliant idea, wrote to this Bulgarian woman.

I got the letter, the invitation to go and teach.

I had to virtually go to the map and see where Fiji was.

Getting from Bulgaria to Fiji in 1990 was an adventure.

And so I'm landing In Fiji.

I handed my passport to the passport control lady.

She takes it, types something, looks at me, and says, "Where are you from?"

I said, "Bulgaria."

She types again, looks at me, and says, "There is no such country."

The first Bulgarian to go to Fiji.

Now, the professor really liked me.

He offered me a job.

I still remember, he offered me a job, $16,000 a year.

I had no idea of my market value.

At that time, I was paid $100 a month, but I still didn't take the job.

Why?

Because it was so far, so far from Bulgaria.

So I went back, I got a chance to go to MIT, to come to the United States, and the rest is history.

David: But did you ever say, "I'm not going back to Bulgaria.

I'm now in the West, and I'm going to stay in the West"?

Kristalina: Actually, no.

I came to MIT with the idea to spend one year, learn as much as I can, and bring this knowledge back to Bulgaria.

I actually had a contract to write a textbook on environmental economics as an outcome of this visit, but the World Bank called me up.

They offered me a summer job.

I came for the summer.

The fourth day, I'm at this consulting job.

I got the call, and I got an offer to stay at the Bank.

Why?

At that time, the Bank was looking for environmental economist.

'92, pass review?

Check.

They were desperate for women.

They were very male-dominated.

So check.

And they were opening up towards the Soviet Union, formerly Eastern Bloc.

Russian speakers?

Check.

So I took the job.

I said, "Well, you know, this is such an opportunity to work here."

And then I did incredibly interesting jobs within the bank.

I rised up in the ranks.

And one day, I got the call to go to Europe.

David: What did you actually do there?

What was your job.

Kristalina: I had first the job of humanitarian and crisis commissioner, and it was an incredible experience.

I had a front-seat position in all the terrible crises that were happening at that time, from Haiti earthquake to the triple disaster in Japan to the Syrian war, and I was able to mobilize the very best of Europe to help people in terrible need and reform the crisis response system of Europe.

One of my strong memories of this time-- I'm in a village talking to a Syrian girl, Who wants to go back to school, but there is no schooling available.

And I said to her-- her name was Aisha-- I said, "Aisha, I hope you will be able to go back to school," and walked out of there, and I thought, "My hope, it means nothing to her.

My acting would make a difference."

And then we mobilized, and we scaled up massively access to education for Syrian refugee children.

David: So you talked about Bretton Woods and how the IMF and the World Bank were created in the late 1940s.

If you had been there then, how would you change the structure for the IMF or the World Bank?

And might you think there could be some time in the future when some of the structure might be changed to make it better?

Kristalina: Well, they were created very thoughtfully with institutions that evolve with time.

Their shareholding changes as the world economy changes.

What is required from us is to relentlessly pursue this adjustment.

So, the IMF, in terms of its governance and the shareholding, reflects the world of today, and that takes a lot of work, bringing the membership together.

The IMF has done a successful quarter adjustment-- this is changing shareholding-- and now is due to take stock again.

So, between now and 2023, that will be a very important job to do.

David: So what percentage of the people who are on the staff, are they Americans or from overseas?

And what percentage are male and female and so forth?

Kristalina: So we have just about 75% of staff from all countries in the world and around 25% Americans.

Logically, for many positions, we recruit locally, like for some of the assistants, coordinators.

For the professional pool, we recruit internationally and competitively.

Broadly speaking, we are about the same, men and women, but you wouldn't be surprised when we go up, there are more men than we have down.

And this is something that I am zeroing on.

When I came, directors--this is the layer of management that has most important operational responsibility-- were 25% women, 75% men.

Now they are 40/60, and I would drive this pipeline of talented women not because I am obsessed with percentages, but because diversity matters.

Having different regional perspectives, having men and women working together makes us more effective.

We make better decisions as a result.

David: Historically, the World Bank president was picked more or less by the United States administration, or president of the United States, and the head of the IMF was more or less picked by Europeans, I would say.

You foresee that that will change, or that's going to continue for the foreseeable future?

Kristalina: I think that there will be more and more demand to make these positions open for competition based on merits.

And even if you take this round, yes, I'm European.

Europe aligned to nominate me, but I'm a European from a country that in the mid-nineties benefited from an IMF program.

I do belong to emerging markets, and emerging markets were very loud in supporting me for that reason.

So I want to see that process to continue.

Why?

Because institutions are much stronger when the whole world believes they belong to all of us.

David: Now, China has become a major economic power, I guess the second largest economy in the world.

Does China have the influence in the IMF and the World Bank proportionate to its overall global economy now?

Kristalina: Well, they have increased their shareholding in both institutions.

They have been also very active in supporting the institutions.

In the case of the IMF, China, U.S., the rest of the world in this crisis stepped up significantly support for us to be able to extend concessional lending, and I see the engagement of China as constructive.

That is so very important when we are in the midst of the worst crisis we have had since the Second World War.

David: So the IMF stands for the International Monetary Fund.

Have you ever thought of changing it to say it stands for "I am fair"?

"I am friendly"?

Wouldn't that be better?

Kristalina: I love that.

Most people here in the Fund say it stands for "It is Mostly Fiscal," but I much prefer the definition you gave, and, actually, this is what I would relentlessly work for-- we at the Fund--to always think of the people whose lives are impacted by the policies we recommend.

David: You're the most prominent person in the West from Bulgaria as far as I know.

Maybe there's somebody else, but I can't think of anybody else.

So I assume you could go back to Bulgaria whenever you wanted to and run for president of Bulgaria.

I don't know if that's a better job than the one you currently have.

But have you ever thought of running for office in Bulgaria, or you're quite happy where you are?

Kristalina: I always take the job I have as what takes my full concentration.

I pour my heart in it.

I never, ever think of, What next?

So as long as I'm the head of the IMF, it is the IMF and the membership that has my complete dedication.