Intergovernmental Group of Twenty-Four on International Monetary Affairs and Development: Communiqué
IMF News, April 24, 2009
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- Published: April 24, 2009
Meeting overview
- Meeting: eighty-first meeting of G24 Ministers.
- Date and location: April 24, 2009, Washington, D.C.
- Chair and vice-chairs:
- Mr. Adib Mayaleh, Governor of the Central Bank of Syria — Chair.
- Mr. Guido Mantega, Minister of Finance of Brazil — First Vice-Chairman.
- Mr. Trevor Manuel, Minister of Finance of South Africa — Second Vice-Chairman.
- Preceding meeting: ninety-third meeting of the Deputies of the Group of Twenty-Four on April 23, 2009 (Chair: Mrs. Maya Choueiri, Senior Advisor to IMF Executive Director).
- Next meeting expected: October 3, 2009, in Istanbul, Turkey.
Crisis impact and policy priorities
Findings on crisis impact:
- The global financial and economic crisis originating in mature markets continued to have a disproportionate effect on developing countries through:
- falling prices of primary commodities,
- sharply contracting exports,
- declining remittances,
- negative net private capital flows,
- a credit crunch affecting many countries.
- Consequences for developing countries included:
- sharp declines in growth,
- falling reserves,
- rising unemployment and poverty.
- Particular concern about the poorest and most vulnerable countries, including risk of falling ODA.
- Noted risks of a further and more protracted deterioration in the world economy remained considerable.
Policy priorities and calls to action:
- Global solutions required with participation of all countries and consideration of impacts on developing countries.
- Support for G20 Leaders’ commitments to stimulate demand, restore confidence in the financial system, and address regulatory weaknesses.
- Call for all countries to resist protectionist measures in trade, investment, and labor services.
- Underscored importance of an early conclusion to the Doha Round that places developing countries’ needs at its center and urged elimination of subsidies harming agriculture and the poor in developing countries.
- Welcomed UN General Assembly decision to convene a conference on the World Financial and Economic Crisis and its Impact on Development on June 1-3, 2009.
IMF instruments, resources, and conditionality
Support and recommendations:
- Welcomed reform of IMF crisis prevention and resolution instruments to enable more flexible, scaled responses.
- Viewed the new Flexible Credit Line as a useful addition and were encouraged by interest shown.
- Welcomed steps to focus and streamline conditionality, including greater recourse to ex ante and review-based conditionality.
- Called for evenhanded and broad-based implementation of new lending and conditionality framework in recognition of diverse needs and exogenous nature of the crisis.
Resource expansion and specific asks:
- Supported proposal to treble available resources for IMF lending, including through bilateral loans, issuance of notes and bonds, and enhanced and more flexible New Arrangements to Borrow.
- Stated such borrowing should be a bridge to a permanent expansion in IMF resources through a general quota increase.
- Strongly supported and called for early implementation of a new general SDR allocation of at least $250 billion to meet global needs and boost members’ reserves through unconditional resources.
- Called for consideration of an appropriate mechanism for ex post reallocation to enhance benefits for developing countries, especially the poorest.
- Reiterated call for ratification of the Fourth Amendment for a one-time SDR allocation, benefiting countries not helped by earlier allocations.
- Called for early ratification of the IMF’s new income model.
Concessional financing and LICs:
- Welcomed decision to double access limits on concessional lending by the IMF to low-income countries (LICs), and to adjust PRGF access norms accordingly.
- Welcomed proposal to use resources from the agreed sale of gold, consistent with the new income model, to provide additional concessional financing for the poorest countries; asked for further consideration of implementation.
- Called on the donor community to provide subsidy resources needed to augment IMF concessional lending capacity.
- Called for an urgent and comprehensive reform of the IMF’s financing framework for LICs to respond more flexibly to diverse needs.
- Encouraged IMF to apply the same flexibility and streamlined, review-based conditionality in LIC lending as in other facilities.
- Asked for an early review of the debt sustainability framework to reflect diverse LIC circumstances.
Surveillance and international monetary system:
- Reiterated call for strengthened IMF surveillance with greater evenhandedness and more effective surveillance of systemically important advanced countries, international capital flows, and financial markets.
- Supported an early review of the IMF’s role in the international monetary system in light of crisis lessons, including major reserve currencies.
World Bank Group, IDA, and regional banks
Role and recommendations:
- Affirmed the World Bank Group’s critical role supporting countercyclical policies: social safety nets, sustaining infrastructure and priority investments, trade finance, and bank recapitalization.
- Welcomed proposal to scale up World Bank lending and steps to adapt instruments in response to the crisis.
- Welcomed proposal to increase the single borrower limit.
- Asked for World Bank support to be timely to counter immediate effects and prevent full-fledged crises.
- Called on the World Bank to avoid undue conditionality and cautioned against increases in loan pricing policies.
- Noted need for enhanced engagement with client countries, greater decentralization of decision making, and redress of long-standing impediments contributing to non-financial costs of operations.
Capital adequacy, IDA, and donor support:
- Called for a review of capital adequacy by the 2009 Annual Meetings to account for long-term development financing needs while maintaining IBRD financial sustainability and ability to sustain IDA transfers.
- Called for a significant increase in assistance from IDA given the crisis impact on poorest countries.
- Agreed on importance of frontloading the IDA-15 program and stressed need for prompt identification and delivery of programs.
- Called for additional replenishments of IDA to maintain financing in outer years.
- Welcomed initiatives to protect the most vulnerable, including establishment of the Vulnerability Financing Facility.
- Called upon donor community to support additional financing needs and deliver on earlier commitments to meet the Millennium Development Goals.
- Supported timely reviews of capital adequacy in regional development banks to enable expanded and sustained lending.
Governance, voice, and representation in Bretton Woods institutions
Findings and demands:
- Crisis underlined necessity of redressing democratic deficits and enhancing voice and representation of developing countries in decision-making structures.
- Welcomed G20 leaders’ commitment to ambitious and expeditious reform.
- Called for prompt ratification of the April 2008 IMF reform package.
Specific governance calls:
- Strongly supported a substantial increase and realignment of quotas in the IMF to be completed no later than January 2011, after a comprehensive reform of the quota formula to address bias against developing countries.
- Supported realignment of votes in the World Bank to be completed no later than April 2010, reflecting its development mandate.
- Stated realignments should aim over time toward equitable voting power distribution between developed and developing countries without diluting quotas and shares of individual developing countries.
- Called for rebalancing representation in Executive Boards and Ministerial Committees to increase developing country representation.
- Supported an additional chair for sub-Saharan Africa in the IMF within the broader reform agenda.
- Reiterated that Heads and Senior Management of the IMF and World Bank should be chosen via an open, competitive, merit-based process without regard to nationality.
- Called for greater staff diversity, including managerial level, through better representation from severely underrepresented regions.
- Took note of the report of the Manuel Committee as a contribution to governance discussions.
Coordination and collaboration
- Emphasized importance of close collaboration among the IMF, the World Bank, and other multilateral development banks for an effective crisis response.
Participants (selected lists as provided)
African Group:
- Karim Djoudi, Algeria; Charles Koffi Diby, Côte d’Ivoire; Jean-Claude Masangu Mulongo, Democratic Republic of Congo; Mahmoud Mohieldin, Egypt; Sufian Ahmed, Ethiopia; Blaise Louembé, Gabon; Paul Acquah, Ghana; Mansur Mukhtar, Nigeria; Lesetja Kganyago, South Africa.
Asian Group:
- Arvind Virmani, India; Seyed Shamseddin Hosseini, Islamic Republic of Iran; Mohammed Chatah, Lebanon; Shaukat Tarin, Pakistan; Maria Edita Tan, Philippines; Sarath Amunugama, Sri Lanka; Samir El-Khouri, Syrian Arab Republic.
Latin American Group:
- Carlos R. Fernández, Argentina; Rogério Studart, Brazil; Andrés Escobar, Colombia; Oscar Monterroso, Guatemala; Roberto Marino, Mexico; Julio Velarde, Peru; Karen Nunez-Tesheira, Trinidad and Tobago; Rubín Villavicencio, Venezuela.
Observers, Special Guests, and Secretariat (selection):
- Observers: Lual A. Dena, G-77; Abdul Aziz Al Hinai, IsBD; Yisr Barnieh, Arab Monetary Fund; Sultan Al-Suwaidi, United Arab Emirates; Yong Li, China; Hamad Albazai, Saudi Arabia; Oscar de Rojas, UN-DESA; Juan Somavia, ILO; Karim El Aynaoui, Morocco; Supachai Panitchapahdi, UNCTAD; Dem Ismaïla; BCEAO; Inés Bustillo, ECLAC.
- Special Guests: Dominique Strauss-Kahn, Managing Director, International Monetary Fund; Robert B. Zoellick, President, World Bank.
- IMF Executive Board: Mohammed Daïri.
- World Bank Executive Board: Abdulrahman Almofadhi, Nada Mufarrij.
- G-24 Secretariat: Amar Bhattacharya, Ndzouli Mendouga.
- G-24 Research Coordinator: Jomo Sundaram.
- IMF Secretariat for the G-24: Simran Maxwell, Dalila Bendourou.
Communiqué — Intergovernmental Group of Twenty-Four on International Monetary Affairs and Development, April 24, 2009.