{ "title": "Promises to Keep: The Policy Actions Needed to Secure Global Recovery", "publication": "IMF News, September 24, 2012", "sourceUrl": "https://www.imf.org/en/news/articles/2015/09/28/04/53/sp092412", "canonical": "https://www.imf.org/en/news/articles/2015/09/28/04/53/sp092412", "overlayPath": "/en/news/articles/2015/09/28/04/53/sp092412/index.md", "summary": "Speech by Christine Lagarde, Managing Director, International Monetary Fund, at the Peterson Institute for International Economics, Washington DC, September 24, 2012.", "authors": [ "Christine Lagarde" ], "publishDate": "2012-09-24", "sections": [ { "heading": "Introduction & Global Outlook", "content": "- Speech by Christine Lagarde, Managing Director, International Monetary Fund, at the Peterson Institute for International Economics, Washington DC, September 24, 2012.\n- Main message: the urgent need to implement the policy actions required to secure the global recovery; “we have promises to keep.”\n- Recent central bank initiatives cited as positive policy signals: the European Central Bank’s OMT bond-purchasing program, QE3 by the U.S. Federal Reserve, the Bank of Japan’s expanded Asset Purchase Program.\n- IMF view on current global trajectory:\n - Project a gradual recovery, but global growth will likely be a bit weaker than anticipated in July; forecast has trended downward over the last twelve months.\n - Central problem: uncertainty about whether policymakers can and will deliver on their promises.\n - Real effects of uncertainty: increasing divergence in the Eurozone; a tepid recovery in the United States; slowdown in emerging markets; concern in low-income countries about rising food prices and volatile commodity prices; growing frustrations across the Middle East.\n- Lasting legacies of the crisis highlighted:\n - Lasting scars of unemployment, especially among young people and in countries like Greece and Spain.\n - Lasting burden of high public debt—“now at levels rarely seen since the Second World War.”\n - Lasting costs of a poorly functioning financial sector; “Despite real progress, not yet” safer." }, { "heading": "A. Challenges Facing Europe and the US", "content": "- Europe: identified as the epicenter where the most urgent action is needed.\n - Need for a strong and effective banking union to break the vicious cycle between banks and sovereigns.\n - Euro area leaders must deliver on June 29 commitments—establishing a single supervisory mechanism and enabling the direct recapitalization of banks.\n - Other consistent calls: implement the European firewall (notably the European Stability Mechanism); implement the agreed plan for fiscal union; implement country-level programs for growth, jobs and competitiveness.\n - IMF position on program design and support:\n - Favorable consideration for timely and flexible support: slowing the pace of fiscal adjustment where needed; focusing on measures rather than targets; emphasizing growth alongside fiscal consolidation.\n- United States: a major risk with immediate fiscal concerns.\n - Current law implies a dramatic tightening of the deficit by about 4 per cent of GDP next year—risk of plunging the country off a “fiscal cliff.”\n - Such tightening could reduce growth by as much as 2 percent.\n - Failure to reach a deal on raising the debt ceiling could also force a dramatic tightening.\n - IMF call: political clarity and action to avoid the fiscal cliff and a concrete plan to bring down debt gradually over the medium-term.\n- Overarching recommendation: coordinated implementation across multiple players—“multiple players playing one game.”" }, { "heading": "B. Challenges Facing the Rest of the World", "content": "- Emerging markets:\n - The illusion of “decoupling” has vanished; major emerging markets are slowing.\n - Policy advice: position themselves as future global growth leaders by countering vulnerabilities (domestic or external); in some cases pause monetary and fiscal tightening or provide additional stimulus (example: China); ensure high credit growth does not compromise financial stability.\n - Prepare for potential spillovers from other parts of the world.\n - IMF instruments available: Flexible Credit Line (FCL) and Precautionary and Liquidity Line (PLL); examples of users: Colombia, Mexico, Morocco, and Poland.\n- Low-income countries:\n - Performed relatively well through the crisis but are more exposed to shifts in economic fortune and to slowdowns in emerging markets.\n - Food price concerns:\n - 20 percent increase in global food prices since June.\n - Prices of maize and wheat increased by 25 percent in July alone.\n - Countries reliant on imports of these grains, such as Lesotho (also hit by drought), are especially vulnerable.\n - IMF advocacy: continued quality policies and increased international support, including ensuring sufficient financing for the IMF’s concessional lending via the Poverty Reduction and Growth Trust (PRGT).\n- Middle East transitions:\n - Transitioning through regime change is historic and difficult; requires time to formulate strategies, build consensus, and begin inclusive growth and employment.\n - External support needed: financial assistance, FDI, market access, and technical assistance.\n - Concern that many members of the Deauville Partnership have yet to deliver at anticipated scale.\n - IMF commitment: advice, technical assistance, and financing—“We have already committed more than $8 billion to three countries.”" }, { "heading": "C. Challenges Facing the IMF", "content": "- Need for the Fund to adapt to better serve changing global membership; three priority areas highlighted:\n 1. Strengthening surveillance to focus on global stability:\n - Upgrades include:\n - a new Decision for deeper analysis of spillovers and cross-border effects;\n - a new External Sector Report to sharpen assessment of countries’ policies from a multilateral perspective, including exchange rates;\n - much greater focus on analysis of the financial sector.\n 2. Strengthening the global financial safety net and the Fund’s firepower:\n - Recent support: 37 countries making an exceptional contribution of 456 billion dollars in support of the IMF.\n - Ongoing effort to augment resources to support low-income countries via the PRGT.\n 3. Strengthening governance to reflect changing membership:\n - 2010 reforms represent the most significant governance changes in IMF history:\n - increasing the quota shares of dynamic emerging and developing countries by a further 6 percent, totaling 9 percent since 2006;\n - ensuring all the BRIC countries will be in the top ten Fund shareholders;\n - creating—for the first time—an all-elected Executive Board.\n - Reform status and targets:\n - Exceeded the 70 percent of consents required for the quota increase.\n - Very close to reaching the 113 countries required to approve the Board reform—hope to achieve that goal by Tokyo.\n - Pushing to get the 85 percent of voting power needed for the Board reform.\n - IMF aim: reach final agreement on the whole reform package by the time of the Annual Meetings in Tokyo or as soon as possible thereafter." }, { "heading": "Policy Imperatives & Collective Promise", "content": "- Immediate policy imperatives:\n - Deliver on commitments at domestic, regional, and multilateral levels to reduce uncertainty and lock in a sustained rebound rather than a temporary bounce.\n - For Europe: implement banking union, firewall measures, fiscal union commitments, and tailored country programs with growth orientation.\n - For the United States: avoid fiscal cliff and reach medium-term debt reduction plan.\n - For emerging markets: manage vulnerabilities, calibrate stimulus or tightening appropriately, safeguard financial stability.\n - For low-income countries: protect against food price shocks, ensure continued quality policies, and secure sufficient concessional financing.\n - For the Middle East: provide coordinated external support—financial, FDI, market access, technical assistance—to enable successful transitions.\n - For the IMF: complete governance reforms, enhance surveillance and spillover analysis, and maintain adequate resources—particularly for the PRGT.\n- Collective promise: strengthen international cooperation, place broad global interest above narrow national interest, and restore certainty and confidence to support a global recovery.\n\nInternational Monetary Fund — Promises to Keep: The Policy Actions Needed to Secure Global Recovery, Christine Lagarde, September 24, 2012.\n\n---\n\n Content in this bundle\n\n- 092412apdf (PDF){rel=\"external\" type=\"application/pdf\"}\n- 092412cpdf (PDF){rel=\"external\" type=\"application/pdf\"}\n- 092412jpdf (PDF){rel=\"external\" type=\"application/pdf\"}\n- 092412rpdf (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\n References\n\n- United States and the IMF\n- Spain and the IMF\n- Speeches\n- PRESS CENTER\n- Christine Lagarde\n- Press Release: IMF Managing Director Christine Lagarde Calls for Action Now to Secure Global Recovery\n- https://www.imf.org/external/am/2012/index.htm\n- Webcast\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2015/09/28/04/53/sp092412" } ], "bullets": [ "[Markdown version](/en/news/articles/2015/09/28/04/53/sp092412/index.md)", "[Structured JSON version](/en/news/articles/2015/09/28/04/53/sp092412/index.json)", "[Bundle manifest](/en/news/articles/2015/09/28/04/53/sp092412/bundle-manifest.json)", "Authors: Christine Lagarde", "Published: September 24, 2012", "Speech by Christine Lagarde, Managing Director, International Monetary Fund, at the Peterson Institute for International Economics, Washington DC, September 24, 2012.", "Main message: the urgent need to implement the policy actions required to secure the global recovery; “we have promises to keep.”", "Recent central bank initiatives cited as positive policy signals: the European Central Bank’s OMT bond-purchasing program, QE3 by the U.S. Federal Reserve, the Bank of Japan’s expanded Asset Purchase Program.", "IMF view on current global trajectory:", "Lasting legacies of the crisis highlighted:", "Europe: identified as the epicenter where the most urgent action is needed.", "United States: a major risk with immediate fiscal concerns.", "Overarching recommendation: coordinated implementation across multiple players—“multiple players playing one game.”", "Emerging markets:", "Low-income countries:", "Middle East transitions:", "Need for the Fund to adapt to better serve changing global membership; three priority areas highlighted:", "Immediate policy imperatives:", "Collective promise: strengthen international cooperation, place broad global interest above narrow national interest, and restore certainty and confidence to support a global recovery.", "[092412apdf (PDF)](/-/media/websites/imf/imported/external/arabic/np/speeches/2012/092412apdf.pdf){rel=\"external\" type=\"application/pdf\"}", "[092412cpdf (PDF)](/-/media/websites/imf/imported/external/chinese/np/speeches/2012/092412cpdf.pdf){rel=\"external\" type=\"application/pdf\"}", "[092412jpdf (PDF)](/-/media/websites/imf/imported/external/japanese/np/speeches/2012/092412jpdf.pdf){rel=\"external\" type=\"application/pdf\"}", "[092412rpdf (PDF)](/-/media/websites/imf/imported/external/russian/np/speeches/2012/092412rpdf.pdf){rel=\"external\" type=\"application/pdf\"}", "[United States and the IMF](http://www.imf.org/external/country/USA/index.htm)", "[Spain and the IMF](http://www.imf.org/external/country/ESP/index.htm)", "[Speeches](https://www.imf.org/en/news/searchnews)", "[PRESS CENTER](http://presscenter.imf.org/)", "[Christine Lagarde](https://www.imf.org/external/np/omd/bios/cl.htm)", "[Press Release: IMF Managing Director Christine Lagarde Calls for Action Now to Secure Global Recovery](https://www.imf.org/external/np/sec/pr/2012/pr12358.htm)", "[https://www.imf.org/external/am/2012/index.htm](https://www.imf.org/external/am/2012/index.htm)", "[Webcast](https://www.imf.org/external/mmedia/view.aspx?vid=1858912154001)", "[https://www.imf.org/en/home](https://www.imf.org/en/home)" ], "related": [ { "title": "092412apdf", "role": "document", "sourceUrl": "https://www.imf.org/-/media/websites/imf/imported/external/arabic/np/speeches/2012/092412apdf.pdf", "binary": { "path": "/-/media/websites/imf/imported/external/arabic/np/speeches/2012/092412apdf.pdf", "mime": "application/pdf" } }, { "title": "092412cpdf", "role": "document", "sourceUrl": "https://www.imf.org/-/media/websites/imf/imported/external/chinese/np/speeches/2012/092412cpdf.pdf", "binary": { "path": "/-/media/websites/imf/imported/external/chinese/np/speeches/2012/092412cpdf.pdf", "mime": "application/pdf" } }, { "title": "092412jpdf", "role": "document", "sourceUrl": "https://www.imf.org/-/media/websites/imf/imported/external/japanese/np/speeches/2012/092412jpdf.pdf", "binary": { "path": "/-/media/websites/imf/imported/external/japanese/np/speeches/2012/092412jpdf.pdf", "mime": "application/pdf" } }, { "title": "092412rpdf", "role": "document", "sourceUrl": "https://www.imf.org/-/media/websites/imf/imported/external/russian/np/speeches/2012/092412rpdf.pdf", "binary": { "path": "/-/media/websites/imf/imported/external/russian/np/speeches/2012/092412rpdf.pdf", "mime": "application/pdf" } } ], "alternates": { "markdown": "/en/news/articles/2015/09/28/04/53/sp092412/index.md", "json": "/en/news/articles/2015/09/28/04/53/sp092412/index.json", "bundleManifest": "/en/news/articles/2015/09/28/04/53/sp092412/bundle-manifest.json" }, "generatedAtUtc": "2026-09-27T10:34:39.978Z" }