Press Release: Communiqué of the Twenty-Fifth Meeting of the IMFC

IMF News, April 21, 2012

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Canonical URL: Press Release: Communiqué of the Twenty-Fifth Meeting of the IMFC

Chaired by Mr. Tharman Shanmugaratnam, Deputy Prime Minister of Singapore and Minister for Finance.
Press Release No. 12/145
Date: April 21, 2012

The global economy is recovering gradually.
Important policy actions have been taken in the euro area, including through an enhancement of the European firewall.
Economic indicators in the United States have improved.
Emerging market and developing countries on the whole remain a source of strength for the world economy.
The outlook remains one of moderate growth globally, and risks remain high.
Collective action is required to restore confidence, rekindle growth, and create jobs.

Further actions are needed to achieve credible fiscal consolidation and government debt reduction while avoiding excessively contractionary fiscal policies.
Where conditions permit, automatic fiscal stabilizers should be allowed to operate.
Viable medium-term consolidation strategies should be in place in all countries.
Monetary policy should remain accommodative as long as inflation prospects remain anchored and weak growth persists, with careful monitoring of potential cross-border spillovers.
Structural reforms to boost potential output and employment are critical and need further momentum.
In the euro area specifically: continue progress on ensuring debt sustainability, securing financial stability, and undertaking bold structural reforms to boost confidence and productivity, facilitate rebalancing within the monetary union, and promote strong and balanced growth.

Emerging market and developing countries continue to grow but face spillovers from advanced economies.
Key risks: ongoing stresses in Europe, high and volatile oil and commodity prices, and large and volatile capital flows.
Policy balance: attenuate downside risks with appropriate policies to support growth while curbing inflationary pressures.
Rapid credit growth in some economies warrants attention.
Low-income countries should preserve macroeconomic stability and debt sustainability while pursuing development objectives and addressing infrastructure gaps to enhance growth potential.
Call to membership: complete the low-income-country financing package under the Poverty Reduction and Growth Trust through 2014–15, and consider proposals to ensure its long-term sustainability by the 2012 Annual Meetings.
Support for Arab countries in transition: Fund assistance with policy advice, technical assistance, and appropriate financing; collaboration with the Deauville Partnership to facilitate economic transition while safeguarding financial stability.
Encourage the Fund to enhance attention to small states, especially those most vulnerable to external shocks.

Global collaboration is key to sustaining growth and ensuring stability.
Further actions are needed to build on progress in reducing global imbalances:
- Deficit countries: strengthen national saving and enhance export competitiveness.
- Surplus countries: implement structural reforms to strengthen domestic demand and continue efforts toward greater exchange rate flexibility.
Press ahead cooperatively in strengthening financial systems by completing and implementing the agreed international financial reform agenda in an internationally consistent and non-discriminatory manner, including Basel standards, derivatives, and cross-border resolution of financial institutions.
Foster and protect investment as crucial for the global recovery.
Reaffirm collective responsibility to avoid protectionism in all its forms.
The next Consolidated Multilateral Surveillance Report provides an opportunity to assess progress.

Ensure the IMF has the tools and resources to effectively support the membership; welcome directions in the Managing Director’s Action Plan.
Commitment: take necessary actions to secure global financial stability.
Welcome euro area decisions in March to strengthen European firewalls and the availability of central bank swap lines.
Agreement with the G-20 to enhance IMF resources for crisis prevention and resolution as a broad international cooperative effort including a significant number of countries.
Firm commitments to increase resources made available to the IMF by over $430 billion in addition to the quota increase under the 2010 reform.
Characteristics of these resources:
- Available for the whole membership of the IMF, and not earmarked for any particular region.
- Channelled through temporary bilateral loans and note purchase agreements to the IMF’s General Resources Account.
- If used, adequate risk mitigation features, conditionality, and adequate burden sharing among official creditors would apply, as approved by the IMF Board.
Combined with national and regional structural, fiscal, and monetary actions, these efforts demonstrate international commitment to safeguard global financial stability and support the global economic recovery.

Reaffirm urgency of making the 2010 quota and governance reforms effective by the 2012 Annual Meetings to enhance the Fund’s legitimacy and credibility.
Urge members to ratify these reforms expeditiously and call on the Fund to monitor progress transparently and more frequently.
Look forward to an agreement, by January 2013, on a simple and transparent quota formula that better reflects members’ relative positions in the world economy.
Reaffirm commitment to complete the Fifteenth General Review of Quotas by January 2014.
Any realignment is expected to result in increases in the quota shares of dynamic economies in line with their relative positions in the world economy, and hence likely in the share of emerging market and developing countries as a whole.
Steps shall be taken to protect the voice and representation of the poorest members.
Call on the Fund, with input from Deputies, to report on progress at the next meeting.

Welcome recent initiatives on Fund surveillance and agree that the current surveillance framework should be significantly enhanced.
Welcome progress by the Fund in advancing consideration of an integrated surveillance decision and commit to support the decision process.
Strengthening surveillance should:
- Bring together bilateral and multilateral perspectives in Fund policy advice.
- Enable better assessment of global and country level risks and spillovers to economic and financial stability.
- Engage more effectively with policymakers.
The IMFC has a key role in regularly guiding strategic and operational priorities for Fund surveillance.
The next Action Plan provides an opportunity to report on progress.

Press Release: Communiqué of the Twenty-Fifth Meeting of the IMFC (April 21, 2012).