Press Release: IMF Managing Director Rodrigo de Rato's Statement at the Conclusion of a Visit to Russia
September 25, 2007
International Monetary Fund (IMF) Managing Director Rodrigo de Rato made the following statement today in Moscow:
"It is a pleasure for me to visit your country again. I have had the privilege of meeting Deputy Prime Minister Aleksei Kudrin and Chairman of the Central Bank of Russia Sergey Ignatiev, and several of their colleagues.
"The main purpose of my visit is to hear the views of the Russian authorities on the reform of the International Monetary Fund. This reform, known as the Medium Term Strategy, focuses on strengthening IMF governance; enhancing the effectiveness of IMF surveillance; crises prevention; and refocusing our assistance to low-income countries. Some of the key elements of the strategy had been successfully implemented by now, including most recently the adoption of the new framework for bilateral surveillance in June 2007. Russia has made an active and constructive contribution at all stages of this important work of reform.
"However, much remains to be done. I see quota and voice reform as crucial for the continued effectiveness of the Fund and attach the highest priority to making as much progress as possible during the remainder of my time as Managing Director.
"We have made important progress in this area in recent months and there is now broad recognition of the need to raise the voting share of emerging market and developing countries in the Fund. It is important to strive for the maximum possible progress by the Annual Meetings and set the stage for an early agreement on the remaining issues in 2008. Maintaining the momentum of the reform process is crucial.
"I also heard today the views of the Russian authorities on two other elements of the Strategy--the development of a new income model for the Fund that seeks to put our income on a sustainable footing, and the proposed new liquidity instrument which aims to help emerging markets' crises prevention efforts.
"I am grateful for the continued support I received today from the Russian authorities for the Medium Term Strategy. We also exchanged views today about the recent turbulence on financial markets, and the global economic outlook, including the impact of high oil prices. We at the Fund regard the turbulence as a serious problem, and we do not think the crisis is close to being resolved. Events in the financial markets are still unfolding, and it will be some months before the extent of banks' and investors' losses become clear. But we welcome the efforts of the major central banks to relieve the liquidity shortages in credit markets, and believe that this will help to limit the wider economic impact of the recent turbulence. The economic impact of recent developments will remain uncertain so long as the situation in financial markets remains fluid. On the basis of current information, we expect the consequences for the global economy to be modest.
"Our discussions also focused on Russia's economic prospects and economic policy priorities. Russia's economic performance continues to be very strong and vulnerabilities have been much reduced. This favorable performance has owed much to the policy taxing and saving oil reserves. In this regard, I expressed concern about plans to significantly relax fiscal policy at a time when the economy is already showing signs of overheating. This performance has also owed much to high oil prices.
"In this connection, to ensure sustainable fast growth even in the absence of high oil prices, I encourage the authorities to give priority to measures aimed at diversifying the economy and improving the investment climate, including public administration, banking, utilities reform, and early WTO accession.
"We discussed the impact of the recent market turbulence on the Russian banking system. We agreed that while there is no systemic risk, continued regulatory vigilence is called for."