IMF Survey: Weak Global Economy Tops Agenda for Policymakers
IMF Survey online
September 19, 2011
IMF-World Bank Meetings to focus on ways to reboot economy, counter risks
IMF economic surveillance, lending, governance all up for discussion
Rebuilding room for policy maneuver in low-income countries needed to guard against global risks
Recent turbulence in financial markets and increased risks in the global economy mean that the 2011 Annual Meetings of the IMF and World Bank are taking place at a critical time for the global economy.
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Moghadam: Meetings ‘an occasion for formulating and taking forward collective actions to impart momentum to the global economic recovery’ (IMF photo)
Finance ministers and central bank governors will come together to assess the state of the world economy and discuss the policy actions needed to deal with today’s global economic challenges. The IMF’s updated forecast for the world economy will be published September 20.
About 10,000 policymakers, private sector and civil society representatives, journalists, and academics are expected to attend the Annual Meetings, which are set to take place on September 23–24.
In an interview, Reza Moghadam, Director of the IMF’s Strategy, Policy, and Review Department, discusses the issues that are likely to receive most attention at the meetings.
IMF Survey online: How will recent global economic and financial developments influence the meetings?
Moghadam: The Annual Meetings are taking place at a critical time in the global economy. There is widespread concern that the global economic recovery is losing momentum. I am certain that ministers and central bank governors will come to these meetings with that concern uppermost in their minds. The key for the Fund is to facilitate discussion of these issues, both in terms of the causes of the problems and the solutions.
We have two innovative products that the Managing Director will submit to the ministers and governors to discuss. The first one is a Consolidated Multilateral Surveillance Report. It brings all the themes of all our multilateral and bilateral surveillance together to assess the state of the global economy and put forward policy options on how member countries can deal with not only the problems they face, but also those faced by the global economy.
Second is an action plan by the Managing Director, which puts forward ideas on how the Fund can help its membership to respond to the challenges they face right now.
IMF Survey online: What guidance do you expect on how the IMF’s policy advice could be more effective?
Moghadam: I see discussions in three areas. First, surveillance. We have just undertaken a major review of Fund surveillance and we will be putting on the table ideas on how to improve our surveillance further, how to make it more relevant, how to make it as interconnected as the world economy. I expect that ministers and governors will look at those proposals and give us ideas on what they are looking for from the Fund.
The second area is Fund lending. Fund lending has played a critical part in supporting the global economy at a very difficult period. We currently have programs in more than 50 countries, almost a third of the membership. We will be looking to see how ministers and governors would like to improve our lending programs. We have a major review of Fund lending coming up and their input will be very important.
The final area is Fund governance. In late 2010, the membership agreed on a major overhaul of the IMF’s governance structure. It’s critical in terms of the legitimacy and the relevance of the Fund, and for the member countries to feel that their voice is adequately heard within the institution. Those reforms are supposed to be concluded by the 2012 Annual Meetings, so this is a perfect time to take stock of progress. And, as implementation by the membership has been slow, it is a good time to try and accelerate that process.
IMF Survey online: How will the impact of global economic developments on low-income countries factor into the discussions?
Moghadam: The issues facing low-income countries deserve attention at the Annual Meetings. Low-income countries have been very effective in dealing with the fallout of the global economic crisis. They had built room for policy maneuver prior to the crisis and they managed to utilize that space to respond to the crisis. Also, the Fund was able to increase substantially its available concessional financing in order to assist low-income countries if needed.
Moving forward, a lot of that policy space has been exhausted, so if the global economic recovery does lose momentum, then many of those countries may face difficulties. So it would be very important to rebuild those buffers, and there will be a discussion of how that can be done here at the Annual Meetings. Also, it will be important for the Fund to stand ready to provide additional financing if the situation requires it.
IMF Survey online: What are the main outcomes we could expect from the meetings?
Moghadam: The Annual Meetings are a unique occasion. Policymakers from 187 countries will be coming together to discuss global economic issues. The aim of the Fund is to provide a forum for dialogue, and a forum for understanding the issues that each other face. It is also an occasion for formulating and taking forward collective actions—actions by the entire membership—to impart momentum to the global economic recovery.
