ASIA AND THE IMF
IMF Chief Highlights Need for Strong Partnership with Asia
February 9, 2011
- IMF chief’s trip cements ties with Asia
- Fund reforms give stronger voice to the region
- Asia continued strong growth, but need to rebalance
The The Managing Director of the IMF, Dominique Strauss-Kahn, has been discussing the Fund’s relations with its Asian members during a three-day trip to Singapore and Indonesia.
Speaking at an event organized by the Monetary Authority of Singapore (MAS), on the first leg of the two-country trip, he said historic governance reforms at the IMF, including increasing Asia’s voice within the institution, were changing the way countries work together.
“We look forward to continuing our vital partnership with Asia in this new, 21st century IMF,” he said, adding that Asia, as one of the leading economic regions, would play an essential role in finding the global policy solutions needed to achieve future global economic stability.
Governance reform is one of a number of commitments which Strauss-Kahn undertook during a previous visit to the region last July to attend a landmark IMF/Government of Korea conference in the city of Daejeon.
During that meeting, Strauss-Kahn pledged—as part of what has since become known as the “Daejeon deliverables”—to support a stronger role and voice for Asia in the global economy. He also promised to strengthen the IMF’s collaboration with regional organizations in Asia.
Asia has been leading the global recovery and the IMF predicts the region will grow 7 percent this year.
After his visit to Singapore, where he met with Prime Minister Lee Hsien Loong and the Finance Minister, Tharman Shanmugaratnam, the IMF chief travelled onto Indonesia where he was received by President Susilo Bambang Yodhoyono and met with Coordinating Minister Hatta Radjasa, and Governor Darmin Nasution of Bank Indonesia.
In Jakarta, the IMF Managing Director, discussed with the President the global outlook, regional financial integration, and Asia’s role in the world economy. He said the meeting with President Yodhoyono was “the foundation of rebuilding the new kind of relationship between the IMF and Asia in general, and Indonesia in particular.”
“We are your institution. We are a multilateral institution which is built to help membership,” he said, adding that he wanted to provide the IMF’s members with the “the best possible advice when support is needed.”
Managing the global recovery
During his trip, Strauss Kahn called for a wide-ranging approach to economic management which considered employment and social protection and not simply standard macroeconomic and financial policies.
“Because without jobs and income security, there can be no rebound in domestic demand—and ultimately no sustainable recovery.”
Strauss-Kahn warned that the pre-crisis pattern of global imbalances was reemerging. Growth in economies with large external deficits is still being driven by domestic demand, while growth in economies with large external surpluses is still being powered by exports.
The IMF chief called on advanced economies to promote growth and job creation, while emerging economies with large surpluses needed to diversify the drivers of growth.
“Exchange rate adjustment will obviously have to play an important role which is why it should not be resisted,“ he said.