IMF Survey : IMF Work Agenda Stresses Agile, Integrated, Member-Focused Approach

IMF News, December 15, 2015

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Three transitions driving the IMF’s engagement:
- "The prospect of raising interest rates in the United States and its consequences"—impacting advanced economies and emerging markets.
- "China’s rebalancing"—China’s economy is expected to slow as it rebalances growth; important in 2016.
- "Falling commodity prices"—a phenomenon affecting many emerging market economies, partly a consequence of China’s rebalancing.
Emerging markets: slowing in recent years; tightening financial conditions could "put further pressure on them and make it more difficult for them to converge."

The latest IMF Work Program centers on translating the directions in the Global Policy Agenda into a concrete plan for "the next twelve months."
Agenda highlights:
- Support growth.
- Invest in resilience and safeguard financial stability.
- Implement structural reforms for sustainable and inclusive medium-term growth.
- Fortify the international monetary system.

Agility:
- Respond to ongoing transitions, anticipate spillovers and consequences before they happen.
- Focus on lifting growth where "the room for policy maneuver is decreasing."
Integration:
- Better align policy advice across sectors and exploit synergies across work streams.
- Example: integrate capacity building more closely with surveillance and lending operations.
- Analyze macrofinancial and other linkages together rather than separately (e.g., U.S. interest rate rises and emerging markets).
Member-focused:
- Engage with membership at the outset of studies or policy changes and seek feedback at the conclusion.

Post-global financial crisis: growth fell and "potential growth was revised downward."
Structural reform as a vehicle to raise potential growth:
- Across all economy categories (low-income, emerging markets, advanced), two reforms with large payoffs: banking sector reforms and infrastructure spending.
- Other reforms are stage-of-development specific (examples given: labor market and product market reforms in Europe; financial deepening, financial inclusion, and infrastructure spending in other regions).
Shift in emphasis: greater focus on structural reforms to raise growth potential and build resilience, rather than only responding to crises.

Capacity development strengthens resilience through transfer of technology and skills via technical assistance, classroom or online training, and regional training and technical assistance centers.
Study cited: countries with a long-term engagement with the IMF "performed better in terms of growth and spending on social sectors"; performance improvement attributed to capacity development and institutional strengthening that allowed countries to prevent crises rather than respond after a crisis.

Concrete measures delivered in connection with the Financing for Development conference in Addis Ababa:
- "We expanded access to all of our concessional facilities by 50 percent—making more money available for eligible low-income countries."
- "We set the interest rate at zero for all loans extended under the Rapid Credit Facility, a facility focused on countries hit by natural disasters and fragile or post-conflict states."
Planned follow-up work over "the next several months":
- Analyze spillover effects of international tax initiatives.
- Work on financial deepening and inclusion.
- Support domestic revenue mobilization, expenditure efficiency and effectiveness, and attracting and managing capital flows.

The IMF will engage on issues outside its traditional focus when they affect the Fund’s macrostability mandate.
Examples of such topics included in the work program: inequality, climate change, and gender.
Approach: proactively factor these issues into IMF work to "formulate appropriate positions and advice before they create macrofinancial instability."

Source: IMF Survey, December 15, 2015.