## DEVELOPMENT COMMITTEE: THE MANAGING DIRECTOR'S WRITTEN STATEMENT April 2025

## Source details

**Canonical URL:** [DEVELOPMENT COMMITTEE: THE MANAGING DIRECTOR'S WRITTEN STATEMENT April 2025](https://www.imf.org/-/media/files/publications/pp/2025/english/ppea2025011.pdf)

## Other formats

- [Markdown version](/-/media/files/publications/pp/2025/english/ppea2025011.pdf.md)
- [Structured JSON version](/-/media/files/publications/pp/2025/english/ppea2025011.pdf.json)

---

### ECONOMIC OUTLOOK AND RISKS
- Global growth projections:
  - Global growth is projected to drop from 3.3 percent in 2024 to 2.8 percent in 2025, before recovering to 3.0 percent in 2026.
  - Five-year-ahead forecasts at 3.2 percent, compared with the historical average of 3.7 percent during 2000-19.
- Revisions and drivers:
  - Forecasts are lower than the January 2025 WEO Update by 0.5 percentage points for 2025 and 0.3 percentage points for 2026.
  - Downgrades largely reflect direct effects of new trade measures, indirect trade linkage spillovers, heightened uncertainty, and deteriorating sentiment.
  - Many countries face high debt levels and elevated interest rates, with limited policy space.
- Advanced economies (AEs):
  - Growth in AEs is projected to drop from 1.8 percent in 2024 to 1.4 percent in 2025 and 1.5 percent in 2026.
  - Significant downward revisions for Canada, Japan, the United Kingdom, and the United States.
- Emerging and developing economies (EMDEs):
  - Growth in EMDEs is projected to drop to 3.7 percent in 2025 and 3.9 percent in 2026, from 4.3 percent in 2024.
  - This is 0.5 and 0.4 percentage points lower, respectively, compared with the January WEO Update projections.
  - Regional revisions: largest downward revisions in emerging and developing Asia and Middle East and Central Asia; followed by Latin America and the Caribbean; least affected are Sub—Saharan Africa and emerging and developing Europe.
  - China growth revised down by 0.6 and 0.5 percent respectively in 2025 and 2026, reflecting tariffs and trade policy uncertainty.
- Low-income developing countries (LIDCs):
  - Growth in LIDCs is expected to improve from 4.0 percent in 2024 to 4.2 percent in 2025 and 5.2 percent in 2026.
  - Per capita growth rates projected to decline from 3.0 percent in 2024 to 1.9 percent in 2025 and recover to 2.8 in 2026.
  - Of the 20 fastest growing countries in 2024, around half were LIDCs; many poorer LIDCs have seen virtually no progress in per capita incomes over the past 15 years.
  - Advancing development prospects requires strong domestic reforms, significant international support, and proactively addressing debt vulnerabilities, including high debt service.
- Inflation:
  - Global headline inflation is expected to decline to 4.3 percent in 2025 and 3.6 percent in 2026.
  - Inflation in AEs projected to reach 2.2 percent in 2026.
  - Inflation in EMDEs projected to decline to 4.6 percent in 2026.
- Downside and upside risks:
  - Key downside risks: trade tensions and prolonged trade policy uncertainty; financial market volatility; rising long-term interest rates; rising social discontent; increasing challenges to international cooperation; demographic shifts; reductions in international aid flows and remittances for some LIDCs.
  - Potential upside scenarios: trade expansion at regional and cross-regional levels; resolution or mitigation of ongoing conflicts; generalized acceleration in structural reforms; AI-driven productivity gains.

### POLICY PRIORITIES
- Overarching guidance:
  - Policies should restore confidence and stability, reduce imbalances, and sustainably lift growth.
  - Emphasize dialogue and multilateral cooperation, preserving macroeconomic and financial stability, building buffers, and accelerating durable structural reforms.
- Multilateral cooperation and trade:
  - Countries should recommit to a rules-based system and international cooperation to promote a stable and predictable trade environment, facilitate debt restructuring, and address shared challenges.
  - Regional and cross-regional economic integration and cooperation offer opportunities to diversify partnerships and enhance efficiency.
  - International tax cooperation can mitigate harmful tax competition.
  - If bilateral foreign aid flows decline, multilateral assistance will become even more important for LIDCs.
  - Multilateral cooperation will help facilitate international sovereign debt resolution, including through the G20 Common Framework (CF) and the Global Sovereign Debt Roundtable (GSDR).
- Monetary policy:
  - Priority for central banks is fine-tuning monetary policy to ensure price and financial stability.
  - Where near-term inflation risks are tilted to the upside or inflation expectations are rising, future cuts to the policy rate should remain contingent on evidence that inflation is under control.
  - Gradual movement of the policy rate toward a neutral stance is appropriate if inflation expectations are clearly anchored while growth or labor markets are softening.
  - Central bank independence and clear communication are crucial for policy credibility and anchoring inflation expectations.
- Exchange rate and financial stability:
  - The IMF’s Integrated Policy Framework provides guidance on responses to disruptive foreign exchange (FX) volatility.
  - For countries with well-functioning and deep FX markets and low foreign-currency debt: exchange rate flexibility and financial market policies—including rapid, decisive, and well-designed liquidity support—are advisable.
  - For countries with shallow FX markets or sizable foreign currency denominated debt: temporary foreign exchange interventions or capital flow management measures could be appropriate, complemented with macroprudential measures.
  - Macroprudential buffers should be rebuilt where needed to increase resilience, while avoiding a broad tightening of financial conditions.
- Fiscal policy and debt:
  - Restoring fiscal space requires credible medium-term consolidation plans.
  - Fiscal adjustment plans should be anchored in credible fiscal frameworks, grounded in realistic assumptions, and underpinned by reforms to strengthen domestic revenue mobilization and enhance expenditure efficiency, particularly in EMDEs.
  - Careful design of adjustment plans can help mitigate adverse growth and distributional impacts.
  - For countries in or at high risk of debt distress, achieving fiscal sustainability may require debt restructuring in addition to fiscal consolidation.
- Structural reforms:
  - Structural reforms in labor, product, and financial markets can lift productivity and potential growth and support job creation.
  - Recommended measures include increasing participation of women and older workers, facilitating integration of migrants, improving the business environment, streamlining excessive regulation, fighting corruption, promoting innovation and technology adoption, and alleviating financial constraints.
  - Reforms should be carefully calibrated, with early engagement and clear communication to ensure gains are widely shared.

### IMF SUPPORT, INSTITUTIONAL PRIORITIES, AND TOOLS
- IMF role and focus:
  - The IMF supports members with evidence-based policy advice, tailored capacity building, and, when necessary, financial support to resolve balance of payments problems.
  - Emphasis on macroeconomic and financial stability, private sector-led growth, and identifying solutions to shared challenges, including reducing excess imbalances.
  - The IMF provides a platform for cooperative solutions, leveraging near-universal membership.
- Surveillance and analytical work:
  - The forthcoming Comprehensive Surveillance Review (CSR) will set surveillance priorities and modalities for the next 5 years and develop high-level principles to guide engagement in new policy areas.
  - The IMF will rigorously assess external imbalances and recommend multilaterally consistent, country-specific policy changes, including orderly exchange rate adjustments, in bilateral Article IV consultations and the 2025 External Sector Report (ESR).
  - The Review of Financial Sector Assessment Programs (FSAPs) will guide efforts to deepen macro-financial analysis and produce cutting-edge analysis of risks from changes in the financial system.
- Capacity Development (CD):
  - CD delivery will be more flexible, tailored, and better integrated with policy advice and program design.
  - The IMF will modernize CD delivery through new technologies, enhanced use of regional capacity development and training centers, and reinforcing coordination with partners.
- Lending toolkit and program design:
  - Recent Charges and Surcharges Reform has significantly lowered members’ borrowing costs.
  - Full implementation of the PRGT Reform is essential to bolster support for LICs while restoring self-sustainability of the Trust.
  - The IMF is launching the Review of Program Design and Conditionality to ensure programs address macroeconomic imbalances while promoting growth.
  - The IMF will explore ways to strengthen precautionary facilities, including in the forthcoming review of the Short-Term Liquidity Line (SLL).
- Debt work and frameworks:
  - Continued involvement on debt issues through analytical work, operational support to debt restructurings, and work at the Global Sovereign Debt Roundtable (GSDR), including a playbook for country authorities considering debt restructuring.
  - Advance work on IMF debt policies, update the 2020 stock-take on the international architecture for resolving sovereign debt involving private sector creditors, and finalize the review of the IMF-World Bank debt sustainability framework for low-income countries (LIC DSF).
  - The forthcoming Sovereign Risk and Debt Sustainability Framework (SRDSF) guidance update will simplify implementation.
  - The 3-pillar approach, proposed jointly with the World Bank, aims to support countries whose debt is sustainable but face high debt service, implemented flexibly based on country specificities.
- Institution-building and governance:
  - Implementation of the 16th General Review of Quota (GRQ) is ongoing; work on quota shares under the 17th GRQ will continue.
  - The Fund welcomed the 25th Executive Board Chair intended for sub-Saharan Africa in November 2024.
  - The IMF seeks efficiency gains through periodic policy reviews and an ongoing streamlining exercise, and remains committed to attracting and retaining top talent and building a versatile workforce.

*Source: ppea2025011*

---


_Source: https://www.imf.org/-/media/files/publications/pp/2025/english/ppea2025011.pdf_