Communiqué of the Thirty-Second Meeting of the International Monetary and Financial Committee (IMFC), October 9, 2015, Lima, Peru

IMF News, October 9, 2015

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Communiqué of the Thirty-Second Meeting of the International Monetary and Financial Committee (IMFC), October 9, 2015, Lima, Peru

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Bibliographic details

• Published: October 9, 2015

Meeting details

• Chaired by Mr. Agustín Carstens, Governor of the Bank of Mexico
• Date and location: October 9, 2015, Lima, Peru
• Next meeting: Washington, D.C. on April 15-16, 2016
• Attendance reference: http://www.imf.org/external/am/2015/imfc/attendees/index.htm

Global economy — assessment and risks

• The global recovery continues, but growth remains modest and uneven overall.
• Uncertainty and financial market volatility have increased, and medium-term growth prospects have weakened.
• Advanced economies:
  • Recovery expected to pick up modestly, supported by lower commodity prices, continued accommodative monetary policies, and improved financial stability.
  • Underlying productivity growth remains weak and inflation remains generally below central bank objectives.
• Emerging market and developing countries:
  • Growth prospects differ across countries; overall outlook affected by uncertainties around commodity prices and global financial conditions.
  • Many are exposed to tighter financing conditions, slowing capital inflows, and currency pressures amid high private sector foreign currency indebtedness.
  • Further declines in commodity prices could weaken the outlook for commodity exporters, many of which are low-income countries.
• Special country and regional issues:
  • Developments in several countries connected with large refugee flows have created economic and humanitarian challenges for both source and host countries.
  • China’s ongoing rebalancing toward more sustainable growth is welcome, while vigilance is necessary regarding external challenges.
  • In advanced economies, a sustained recovery in the euro area, positive growth in Japan, and continued solid activity in the United States and the United Kingdom are positive forces, though spillovers from increased market volatility may pose financial stability challenges in the near term.
• Broader concerns:
  • In many advanced economies, the main risk remains a decline of already low growth, particularly if global demand falters further and supply constraints are not removed.
  • High levels of debt remain a concern.
  • Global imbalances are reduced from previous years but a further rebalancing of demand is still needed.

Global policy priorities — recommendations

• Overarching priorities:
  • Lift short-term and potential growth.
  • Preserve fiscal sustainability.
  • Reduce unemployment.
  • Manage financial stability risks.
  • Support trade.
  • Reaffirm commitment to refrain from all forms of protectionism and competitive devaluations.
• Support growth today:
  • Advanced economies should maintain an accommodative monetary stance, where appropriate, consistent with central bank mandates; mindful of financial stability risks.
  • Implement fiscal policies flexibly to support growth and job creation while putting debt as a share of GDP on a sustainable path.
  • Emerging market and developing countries should use available policy space to smooth adjustment to less favorable external conditions and remove bottlenecks to stronger growth.
  • In economies with limited policy space, fiscal policies should ensure sustainability while preserving efficient social and infrastructure spending.
  • Commodity-exporting countries with worsening terms of trade and limited buffers may need to reassess fiscal policies in the face of lower commodity-related revenue.
• Invest in resilience:
  • Complete and implement the global financial regulatory reform agenda in a timely and consistent manner; monitor and address issues raised by financial activities outside the banking system as necessary.
  • Priorities in many advanced economies: repair balance sheets, tackle nonperforming loans, and monitor and, if necessary, address market liquidity issues.
  • Emerging market and developing countries should enhance policy frameworks and maintain adequate buffers; foreign currency exposures warrant special attention.
  • Exchange rate flexibility, where feasible, can act as a shock absorber.
  • Use appropriate, well targeted macro-prudential tools and strong supervision to preserve financial stability.
  • When facing large and volatile capital flows, necessary macroeconomic policy adjustment could be supported by macro-prudential and, as appropriate, capital flow management measures.
  • Maintain a strong global financial safety net to provide liquidity in times of need.
• Secure sustainable long-term growth:
  • Timely-implemented and well-sequenced structural reforms to raise productivity, potential output, and living standards; bolster confidence; and reduce inequality.
  • Identify new sources of growth; address supply bottlenecks, infrastructure gaps, and population aging; and promote inclusive, environmentally sustainable growth.
  • Further trade liberalization to complement and reinforce other reforms.
  • Use lower oil prices as an opportunity to reform inefficient energy subsidies and energy taxes, while strengthening targeted social safety nets.
  • In advanced economies, invigorate productivity growth through policies to stimulate labor demand and supply (for example by raising female labor force participation), boost innovation, and enhance resource allocation in services sectors and investment.
  • In emerging market and low-income countries, improve business conditions, institutions and governance, and close education and infrastructure gaps to support convergence to higher income levels and help reduce inequality.

IMF operations — roles and requests

• General:
  • Welcome IMF initiatives to be more agile, integrated, and member-focused given increasing uncertainty and complex economic and financial linkages.
  • IMF should deepen analysis and surveillance and broaden policy advice on macro-critical issues.
• Policy advice and surveillance:
  • Help members calibrate policies to address vulnerabilities and enhance strong, sustainable, and balanced growth.
  • Welcome progress in surveillance priorities, including:
  • Ongoing work on risk and spillover analysis.
  • Examining links between monetary policy and financial stability.
  • Analyzing and addressing, as appropriate, “de-risking” pull-backs by international banks.
  • Strengthening exchange rate analysis.
  • Deepening macro-financial analysis.
  • Closing data gaps.
  • Encourage IMF cooperation with other international institutions on international tax issues.
  • Following adoption of the IMF’s institutional view, support a stocktaking of members’ policies in handling capital flows.
  • Help emerging market and developing countries reap benefits of foreign financing via policy advice to mitigate risks of capital flow reversals.
  • Expanded work on macro-critical structural reforms, leveraging expertise of other institutions.
  • Give attention to macroeconomic consequences of demographic transitions, migration, and large-scale refugee flows, particularly in the Middle-East and Africa.
  • Welcome IMF’s contribution to the global framework for sustainable development and look forward to its implementation.
  • Look forward to IMF’s active contribution — including through assessment of macroeconomic implications of climate change — to a positive outcome of the Conference of Parties 21 (COP21) in Paris, consistent with its mandate.
• Lending:
  • Call on the IMF to continue to stand ready to respond promptly to future demand for financial assistance, including on a precautionary basis, to support appropriate adjustments and reforms and to help protect against risks.
  • Look forward to the forthcoming stocktaking of the international monetary system, including review of adequacy of the global financial safety net architecture.
  • Welcome progress in enhancing access to concessional resources.
  • Look forward to completion of the follow-up crisis program review; continued work on sovereign debt issues to facilitate timely and orderly debt restructuring; review of the exceptional access framework; and completion of the review of the method of valuation of the SDR.
  • Call on the IMF to continue to work closely with the World Bank and other international institutions to support countries affected by humanitarian and refugee crises, especially in the Middle East and Africa, to mitigate adverse effects on regional economies and spillovers to the global economy.
• Capacity building:
  • Support more integration and synergies between surveillance, program work, technical assistance (TA), and training, and increased use of a results-based management framework.
  • Welcome a shift in focus of capacity building and TA to bolster resilience, maintain debt sustainability, improve governance, and support global sustainable development goals within the IMF’s mandate.
  • Priorities include boosting domestic revenue mobilization and financial deepening in developing countries and small and fragile states, and deepening dialogue with developing countries on international tax issues while closely collaborating with development partners.
  • Emphasize tackling illicit flows.
  • Look forward to IMF initiatives to boost peer learning and facilitate transmission of best policy practices among membership.

Governance and representation — stance and requests

• Strong disappointment expressed over the protracted delay in implementing the 2010 IMF quota and governance reforms.
• Reaffirm that earliest implementation of the 2010 reforms remains the highest priority and urge the United States to ratify the 2010 reforms as soon as possible.
• Call on the IMF Executive Board to complete work on an interim solution that will meaningfully converge quota shares as soon as and to the extent possible to levels agreed under the 14th General Review of Quotas.
• Use the 14th Review as a basis for work on the 15th Review, including a new quota formula.
• Reiterate commitment to maintaining a strong, well-resourced, and quota-based IMF.
• Reiterate importance of enhancing staff diversity in the IMF and encourage further progress.

Closing acknowledgements

• Thanks to the government and the people of Peru for hosting the meetings and for their warm hospitality.

Content in this bundle

• Pr15468apdf (PDF)
• Cm15468cpdf (PDF)
• Cm15468jpdf (PDF)
• Cm15468rpdf (PDF)

References

• Peru and the IMF
• United States and the IMF
• Communiqués
• https://www.imf.org/external/am/2015/index.htm
• Communiqué of the Thirty-Second Meeting of the IMFC of the Board of Governors of the IMF
• Documents
• Statements
• PRESS CENTER
• http://www.imf.org/external/am/2015/imfc/attendees/index.htm
• https://www.imf.org/en/home