Lagarde: patterns of economic growth, especially affecting the advanced economies and emerging markets, and changes in the financial sector are shifting (photo: Stephen Jaffe/IMF)
IMF-WORLD BANK ANNUAL MEETINGS
As the world begins to move on from the Great Recession, Lagarde noted that we are now moving toward a period of “Great Transition.”
Lagarde observed that the patterns of economic growth, especially affecting the advanced economies and emerging markets, and changes in the financial sector are shifting. Monetary policies adopted by many central banks are also in transition, she said.
Lagarde explained that these transitions will take time and will need to be managed carefully and in close cooperation. These solutions need to be “as country-specific as they can,” and done “with as much cooperation as possible,” Lagarde told reporters at the start of the Annual Meetings in Washington, which involve economic policymakers from the IMF’s 188 member countries, government officials, civil society organizations, journalists, and invited participants from the academic and private sectors.
Lagarde also announced that, after a multi-year effort, IMF members have agreed to contribute more than 90 percent of windfall profits from IMF gold sales to a key lending facility for poorer countries.
“We have just reached the threshold of enough approval from our membership to transfer the existing gold profit to meet the financing needs of our low-income countries.” Our concessional lending capacity is now sustainable, Lagarde added.
Working together
The Managing Director called on countries to adopt stronger policies on a broad front to make growth more inclusive and more sustainable:
The United States needs to manage the exit from highly accommodative monetary policy very carefully. It also needs to get its fiscal house in order. “Failure to raise the debt ceiling would cause serious damage to the U.S. economy but also to the global economy as a result of the spillover effect,” she warned.
The euro area needs to finish cleaning up its banks, forge ahead with banking union, and break down the barriers that are holding back growth and job creation.
The immediate priority for emerging markets is to navigate any short-term financial turbulence as smoothly as possible, while removing the structural impediments to medium-term growth.
Low-income countries need to continue to implement policies to protect themselves from any potential fallout from global economic volatility.
Lagarde added that the Arab transition countries also need to continue to steer a path toward more inclusive economies that creates more jobs.
Lagarde addressed a broad range of topics in her opening news conference, tackling subjects ranging from the global economy, IMF’s governance reforms, the spillover impact of the U.S. debt ceiling, and country issues, including on China, Greece, Portugal, Nigeria, Spain, Slovenia, and Egypt.
