## MANAGING DIRECTOR’S ACTION PLAN — IMFC, April 2012 ## Source details **Canonical URL:** [MANAGING DIRECTOR’S ACTION PLAN — IMFC, April 2012](https://www.imf.org/-/media/websites/imf/imported-full-text-pdf/external/np/pp/eng/2012/_041812.pdf) ## Other formats - [Markdown version](/-/media/websites/imf/imported-full-text-pdf/external/np/pp/eng/2012/_041812.pdf.md) - [Structured JSON version](/-/media/websites/imf/imported-full-text-pdf/external/np/pp/eng/2012/_041812.pdf.json) --- ### Progress and risks - The world was entering a dangerous phase; policy actions in Europe and improving U.S. indicators have helped attenuate financial strains. - Immediate risks: return of stresses in Europe and higher oil prices. - Medium-term risks: protracted low growth, too rapid fiscal consolidation in certain cases, deleveraging, and uncertain medium-term policy frameworks in some key advanced countries. - Emerging market risks: inflation risks, elevated oil prices, resurgence and volatility in capital inflows, and consequences of extended credit booms. - Additional risk: delays in implementing global regulatory reforms. ### The Fund’s response - The September 2011 Action Plan remains relevant; good progress has been made on many elements, but much remains to be done across the membership. - Need to strengthen the global architecture for stability. ### Europe (Immediate priorities) - Recent actions that helped calm markets include ECB liquidity support, the fiscal compact, progress in several countries, and strengthened firewalls; however, stresses can renew quickly. - Fund roles: - Implement well-designed country programs, especially for countries in crisis; draw early lessons from upcoming reviews of crisis programs and Fund conditionality. - Support and assess pan-European policies and institutions (fiscal, financial, regulatory); continuously assess growth and competitiveness and report frequently to the membership via the Executive Board. - Identify scope for structural reform and macroeconomic policies to promote growth and jobs, crucial to economic and political viability of adjustment. ### Broader membership - Maintain focus on jobs, inclusive growth, fiscal consolidation, bank repair, and building policy buffers. - Fund instruments: policy advice, financing, technical assistance. - Specific actions: - Provide analysis on policy coordination regarding the degree, pace, and composition of fiscal consolidation; examine reform options to promote jobs and more job-friendly fiscal policies; analyze fiscal risk, transparency, and accountability. - Support Arab countries in transition via policy advice; lending including PLLs/RFIs and SBAs as appropriate; technical assistance; collaborate with forums such as the Deauville Partnership to help mobilize committed resources and market access. - Engage emerging markets with policy analysis on balancing current risks and avoiding over-stimulation; address medium-term challenges such as high public debt ratios in some economies and demographic shifts. - Provide guidance to members in fragile situations; enhance attention to small states vulnerable to external shocks. - In LICs: review concessional facilities and debt limit policies to ensure effective Fund support for LIC development agendas; assess exposure to global risks and related policy challenges such as building buffers; advise on financial deepening and managing natural resource revenues; improve technical assistance outcomes. ### Adequate safety net - Stronger European and global firewalls are key to stemming contagion risks and securing a durable exit from the crisis. - At end March, Euro Area finance ministers committed to raise European firewalls to €800 billion, with €300 billion already committed and an accelerated phase-in for the remainder. - Fund resource needs and actions: - The membership should move swiftly to significantly raise Fund resources, by at least $400 billion. More than $285 billion have been pledged so far. - Complementing the $200 billion pledges already received from the Euro Area, Japan announced on April 17 its intention to contribute $60 billion, followed by Denmark, Norway, and Sweden together committing over $26 billion. - The Executive Board should quickly finalize modalities for raising resources, with safeguards to protect the Fund’s balance sheet against concentrated and correlated risks. - Complete the 2009 LIC financing package to secure concessional financing under the PRGT through 2014–15. - Take forward the issue of long-term sustainability of the PRGT by next September. ### Architecture for global cooperation — Enhancing surveillance - Aim: promote stability at national and international levels; improve risk assessments and better integrate financial and macroeconomic issues. - Planned initiatives: - Prepare a unified spillover report for the five systemic economies to strengthen surveillance of systemic economies and bridge country and global surveillance. - Bring multilateral consistency to analysis of external stability with a new external sector report examining drivers of imbalances and associated risks to external stability. - Agree on an integrated surveillance decision to institutionalize bringing together bilateral and multilateral perspectives; use the Article IV consultation as a vehicle; provide guidance on domestic policies in addition to exchange rate policies; address collective action issues. - Adapt institutional culture with greater use of cross-department task forces to integrate bilateral and multilateral surveillance. - Develop a financial sector strategy and work closely with partners such as the Financial Stability Board on macro-financial linkages, data gaps, identification of global systemic risk, macro-prudential policy, and cross-border resolution frameworks. - Strengthen assessment of debt vulnerabilities across the membership and better integrate debt issues into surveillance. - Draw on recent work to develop a comprehensive, flexible, and balanced approach to capital flows. ### Governance - Enhancing the Fund’s legitimacy is essential for coordinating collective efforts and bolstering global stability. - Implement the 2010 quota and governance reform as agreed by the Annual Meetings and comprehensively review the quota formula by next January. - Status and actions: - The 2010 reform has progressed, but not nearly enough; urgent efforts are needed to meet the goal by the Annual Meetings. More frequent (monthly) discussion of progress by the Executive Board should be considered, with greater focus on progress in each constituency. - The quota increase is contingent on entry into effect of the Board reform amendment and on consents from members with at least 70 percent of total quotas as of November 2010. - On the Board reform amendment, acceptance by 113 members with 85 percent of the total voting power is needed, but only 70 members with 46 percent of voting power have accepted as of April 17. - Members with 54 percent of quotas have consented to the quota increase. - The Executive Board is considering election rules that would allow voluntary re-composition of the Board to increase the number of emerging market and developing country chairs. - Discussions on improving the quota formula must gather momentum to meet the deadline of January 2013. - Continue to enhance diversity of Fund staff along various dimensions, including professional diversity; progress will be monitored carefully. ### Bottom line - Despite recent policy actions, risks to the global economy remain large. - Collective and cooperative actions are needed on strengthened policies, firewalls, and architecture to avoid slipping back into crisis and to secure global stability. *MANAGING DIRECTOR’S ACTION PLAN — IMFC, April 2012* --- _Source: https://www.imf.org/-/media/websites/imf/imported-full-text-pdf/external/np/pp/eng/2012/_041812.pdf_