Intergovermental Group of Twenty-Four on International Monetary Affairs and Development
IMF News, April 16, 2015
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- Published: April 16, 2015
Meeting and Leadership
- Ninety-third meeting held in Washington, D.C. on April 16, 2015.
- Chair: Alain Bifani, Director-General of the Ministry of Finance of Lebanon.
- First Vice-Chair: Andres Escobar, Vice-Minister of Finance and Public Credit of Colombia.
- Second Vice-Chair: Sufian Ahmed, Minister of Finance of Ethiopia.
- Deputies’ one hundred and fifth meeting preceded the Ministers’ meeting on April 15, 2015.
Global Economy and Implications for Developing Countries
- General assessment:
- Global recovery remains uneven, with divergences across countries and regions.
- Emerging markets and developing countries (EMDCs) continue to be the major drivers of global growth, although growth is moderating in some countries.
- Weakness persists in the Euro area and Japan; U.S. growth has shown some improvement.
- Important downside risks remain, including potential spillovers from U.S. monetary policy normalization and divergent monetary policies among advanced economies, with potential for increased exchange rate and capital flow volatility.
- Continued uncertainty associated with Greece and a possible fallout is a concern.
- Policy stance:
- Call for collective international policy coordination and responses to boost demand and rekindle business confidence.
- G-24 countries commit to continue efforts to put in place sound macroeconomic and structural policies to sustain higher and more inclusive growth.
- Commodities and oil:
- Overall impact of the fall in oil prices on the global economy has been positive.
- Oil importers benefited from income effects and improvements in fiscal space.
- Oil and commodity exporters face challenges in managing fiscal positions and improving resilience to oil price shocks, including through diversifying the export base.
- Welcome reform of energy subsidies and taxes.
- Recent framework agreement between Iran and P5+1 countries is likely to have a stabilizing impact on oil markets over the long term.
- Resilience and financial backstops:
- Domestic policy efforts to improve resilience to external shocks remain critical and must be complemented by adequate financial backstops, including from the IMF and other international financial institutions (IFIs).
- Look forward to IMF work to strengthen its lending framework, including to protect its resources, drawing lessons from recent experiences in restructuring.
- Welcome progress in the implementation of the BRICS’s Contingent Reserve Arrangement.
- Support continued global reforms to strengthen financial regulation, with vigilance on unintended consequences (availability of long-term finance, financial inclusion and deepening).
- Geopolitical and humanitarian concerns:
- Concern about heightened geopolitical tensions and security concerns, particularly in the Middle East, Ukraine, and West Africa, with regional and global implications.
- Countries disproportionately affected include Lebanon, Chad, Jordan, and Niger, notably due to economic and social impacts of heavy flows of refugees.
- Support diplomatic efforts to resolve regional tensions.
- Health and catastrophe preparedness:
- Welcome international efforts to assist countries affected by the Ebola epidemic and mechanisms to improve prevention/response to future global epidemics and catastrophes.
- Welcome establishment of the IMF’s Catastrophe Containment and Relief Trust and look forward to progress on the World Bank Group’s Pandemic Emergency Facility.
- Fragile and conflict-affected situations:
- Continued concern about difficulties faced by countries in fragile and conflict-affected situations.
- Look forward to the upcoming review of Fund engagement with these countries and urge issuance of new guidelines.
- Call for greater IFI attention and support, including through higher levels of access to concessional financing.
- Small developing states:
- Welcome discussion on macroeconomic issues in small developing states and encourage leveraging IFIs’ engagement.
- Call for greater IFI support, including enhancing access to concessional financing.
Financing for Development
- 2015 priorities and multilateral processes:
- 2015 characterized as pivotal for action on development and climate change; marks deadline for Millennium Development Goals.
- Look forward to the Third International Conference on Financing for Development (FfD), launch of the post-2015 development agenda including the Sustainable Development Goals (SDGs), and the U.N. Climate Change Conference (COP21).
- Expectation of a credible financing framework for the SDGs.
- Support focus and collaboration on FfD by the WBG, the IMF, and other multilateral development banks (MDBs), consistent with mandates and areas of expertise.
- Support review of role, scale, and effectiveness of existing MDBs to determine how to scale up support for SDG implementation.
- Zero Draft and priorities:
- Note the “Zero Draft of the Outcome Document of the Third International Conference on Financing for Development” as a good starting point.
- Support emphasis on leveraging public and private financing, investment in people, and sustainable infrastructure.
- Stress that robust FfD framework needs collaborative efforts for sustained, inclusive growth that creates jobs, reduces poverty, and addresses inequality.
- Domestic resource mobilization (DRM) and tax cooperation:
- DRM is an important source of development financing; scope exists to enhance tax revenues, improve public expenditure efficiency, and develop domestic capital markets.
- Call for increased global cooperation in addressing harmful tax practices that erode domestic resource bases in developing countries.
- Acknowledge G20 and OECD initiatives on base erosion and profit shifting (BEPS) and the automatic exchange of information (AEoI).
- Welcome efforts to engage developing countries in joining and implementing BEPS and AEoI meaningfully and on equal footing, considering capacity and readiness differences.
- Welcome recommendations of the High-Level Panel on Illicit Financial Flows from Africa; call for strong international actions to curb illicit flows and facilitate asset recovery and repatriation.
- Official development assistance (ODA) and new financing sources:
- ODA flows remain a key source of development finance and effective as catalysts of private investment.
- Call on advanced economies to meet ODA commitments and on all development partners to continue providing development assistance, with an increased share for the least developed countries and focus on leveraging resources for greater impact.
- Encourage exploration of new sources of development financing.
- Climate finance:
- Stress that climate change mitigation and adaptation are related to development challenges.
- Underscore that, in line with commitments, there should be adequate, new, and additional finance to assist developing countries, particularly those most vulnerable to climate change.
- Infrastructure:
- Critical importance of infrastructure investments for increasing growth.
- Public sector central role in regulatory policies, project preparation, and management of contingent liabilities.
- Leveraging private finance for long-term investment, including infrastructure, is crucial and will require effective approaches and innovative instruments.
- MDBs need to play a greater role in supporting governments to scale up infrastructure investment.
- Look forward to full implementation of financing and capacity building mechanisms in existing MDBs and ambitious efforts to increase financing for infrastructure while crowding in private financing.
- Look forward to operational launch of the New Development Bank and establishment of the Asian Infrastructure Investment Bank.
- Debt and concessional finance policies:
- Note recent reform of the IMF’s Debt Limits Policy, recognizing some low-income countries (LICs) need to tap external financial markets to complement limited concessional financing and domestic resources.
- Call for flexible implementation of this policy to account for member capabilities and needs while preserving evenhandedness.
- Emphasize that access to external financing, with sound debt management and effective use of borrowed funds, should enable financing of productive investments.
- Welcome Fund’s extension, until December 2016, of the temporary waiver on interest rates applicable to the Poverty Reduction and Growth Trust.
- Call for urgent review and greater flexibility of the International Development Association’s (IDA) non-concessional borrowing policy for LICs, considering large financing needs and changing financing landscape.
- Urge care and caution regarding proposals to leverage IDA resources to raise debt to provide non-concessional loans, as this may alter IDA’s character and reduce concessional funds availability.
- Sovereign debt restructuring processes:
- Welcome progress to strengthen the contractual framework for debt issuance, in particular regarding the reformed pari passu and collective action clauses at the IMF.
- Recognize the creation of the U.N. Ad Hoc Committee on Sovereign Debt Restructuring Processes, which will review the issue in coming months.
Reform and Governance of International Financial Institutions
- IMF governance and quotas:
- Reiterate deep disappointment with lack of progress in implementing the IMF quota and governance reforms agreed in 2010 and strongly urge the U.S. to complete ratification.
- State this impedes IMF credibility, legitimacy, and effectiveness and has delayed a new quota formula and the 15th General Review of Quotas.
- Implementing the 2010 reforms remains a key priority.
- Preference expressed for de-linking quota reform from the Board reform amendment (which requires U.S. ratification) as an interim option to increase IMF resources and realign quotas to reflect EMDCs’ increased economic weight.
- Alternative interim ad hoc increases could achieve meaningful progress toward shifts in representation but would increase IMF quota resources only marginally.
- Emphasize any interim measures should not lower incentives to complete the 14th General Review of Quotas.
- Call for speedy initiation of IMF 15th General Review of Quotas:
- Request initiation of work on the IMF 15th General Review of Quotas, including a new quota formula, without further delays to complete it by the December, 2015 deadline as mandated under the Articles of Agreement.
- Reiterate longstanding call for a third chair for Sub-Saharan Africa in the IMF Executive Board, provided this does not come at the expense of other EMDC chairs.
- World Bank shareholding review:
- Reiterate commitment to conclude the next World Bank shareholding review by no later than October, 2015, as agreed by Governors in 2010, and call for a roadmap for this review.
- Stress any future shareholding realignment formula must meaningfully increase voting power of developing and transition countries and move towards equitable voting power, while protecting the voting power of the smallest poor countries.
- World Bank Group reforms and policies:
- Welcome progress implementing the WBG reform agenda, particularly a new country engagement model.
- Call on the Bank to further strengthen its operating model to enhance client relationships and development results.
- Welcome ongoing World Bank reviews of safeguards and procurement policies to streamline environmental and social safeguard policies and move toward fit-for-purpose procurement.
- Appreciate greater role envisaged for the use of national systems and look forward to revised policies that recognize country diversity and promote capacity building.
- Urge the Bank to remain responsive to developing countries’ views and ensure new frameworks improve operational efficiency and development results without imposing undue burden on borrowers.
- Principles on IFI financing and representation:
- Continue to believe IFI financing, particularly the WBG, should be based solely on countries’ economic conditions without political considerations.
- Call for concrete efforts for greater representation of nationals from underrepresented regions and countries through recruitment, career progression, and promotions to achieve balanced representation in the WBG and IMF.
- Reiterate importance of staff diversity and gender balance at all levels, including diversity of educational institutions.
Other Matters and Next Meeting
- Next meeting of the G-24 Ministers expected on October 8, 2015 in Lima, Peru.
List of Participants (high-level)
- Ministers and Deputies from African, Asian, and Latin American groups participated, including named representatives from Algeria, Côte d’Ivoire, Democratic Republic of Congo, Egypt, Ethiopia, Gabon, Ghana, Nigeria, South Africa; India, Islamic Republic of Iran, Lebanon, Pakistan, Philippines, Sri Lanka, Syrian Arab Republic; Argentina, Brazil, Colombia, Guatemala, Mexico, Peru, Trinidad and Tobago, Venezuela.
- Observers included representatives from Arab Monetary Fund, China, Ecuador, G-20, G-77, ILO, IsDB, Morocco, OFID, OPEC, South Centre, United Arab Emirates, UNCTAD, UNDESA, UNECLAC and others.
- Special Guests: Christine Lagarde, Managing Director, International Monetary Fund; Jim Yong Kim, President, World Bank.
- G-24 Secretariat and IMF Secretariat for the G-24 named in list.
Intergovermental Group of Twenty-Four on International Monetary Affairs and Development — Communiqué, April 16, 2015.