Address to Opening Plenary of United Nations Summit on Millennium Development Goals, By Dominique Strauss-Kahn, Managing Director, International Monetary Fund
September 20, 2010By Dominique Strauss-Kahn
Managing Director, International Monetary Fund
New York, September 20, 2010
As prepared for delivery
I speak to you today with a sense of urgency. Before the crisis, we saw strong growth and macroeconomic stability in developing countries—driven mainly by good homegrown policies, but supported by an enabling international environment. This was translating into falling poverty and improving social indicators, and gave us grounds for optimism. But because of the crisis—not only the financial crisis but also the food and fuel crisis—we have lost years of progress, and the momentum has been derailed. As a result, about 70 million fewer people will have escaped from the chains of poverty by 2020. And many millions more will suffer the consequences of prolonged unemployment and underemployment.
We must redouble our efforts in the face of this immense human suffering. We must strive for a speedy return to the pre-crisis path.
For this to happen—and this is my main message today—everything hinges on the restoration of balanced, sustainable, global growth. Without this, all other efforts to achieve the Millennium Development Goals will be frustrated. We will be treading water against a rapidly advancing tide.
To regain the momentum, we need a sense of shared responsibility between the various actors—the developing countries themselves, the advanced economies, and the international institutions.
The advanced economies, and indeed the leading emerging markets, should focus first and foremost on securing a sustainable global recovery, and getting the growth engine up and running again. Analysis undertaken by the IMF and World Bank for the G20 has shown that cooperative action by the world's major economies could produce real results—boosting world growth by 2½ percentage points over five years, creating 30 million new jobs, and lifting 33 million people out of poverty. This talk of cooperation is not just a mantra—it is real, it is essential, and it affects people's lives.
Of course, advanced economies can and should help in other ways too—by keeping their Gleneagles promises on aid, and also by opening up trade. Indeed, trade is one of the most important ways that advanced countries can help their low-income neighbors, and without budgetary costs. Exports have the ability to unleash a wave of productivity and growth in developing countries.
The developing countries must also help themselves, which means building on past success. Because they built the levies during good times, they were able to lessen the economic hardship when the crisis arrived. They had the fiscal room—and sometimes the monetary room—to support their economies and help vulnerable people withstand the shock. They must now rebuild their policy buffers to be ready for the next shock, including by mobilizing domestic tax revenue. This will create room to invest in infrastructure and strengthen social safety nets, to accelerate growth and protect the poor and vulnerable.
The international financial institutions must also play their part. During the crisis, the IMF rapidly increased its support for low-income members—quadrupling our lending, with zero interest rates, and with streamlined conditionality. These efforts were designed to support growth—sustained, pro-poor, inclusive growth—which is the priority.
Let me conclude. The UN and the IMF share a common birth and a common goal. Both were founded in the wake of the Second World War, after economic conflict turned into real conflict, leaving tens of millions dead and the world in ruins. In a moment of singular idealism, the leaders of the postwar world vowed never to repeat the mistakes of the past, promising instead to cooperate, secure in the knowledge that the welfare of one nation promotes the welfare of all.
The mandate of the IMF might begin with economic stability, but it ends with a much greater goal—a peaceful and prosperous world.
We will not fulfill this mandate while so many of our fellow global citizens remain marginalized, without access to the basic necessities, hindered from making a decent and secure living. Let us together fulfill the postwar promise. Let us support the common welfare of humanity. And let us look forward to a world free of poverty and free of conflict.