## Transcript of the International Financial and Monetary Committee (IMFC) Press Conference

_IMF News, October 13, 2012_

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**Canonical URL:** [Transcript of the International Financial and Monetary Committee (IMFC) Press Conference](https://www.imf.org/en/news/articles/2015/09/28/04/54/tr101312)

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## Bibliographic details
- Published: October 13, 2012

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### Opening remarks and overall assessment
- IMFC members agreed they are in a better position today than six months ago with regard to the policy footing, getting growth restarted, and achieving fiscal consolidation in the advanced economies.
- The economic environment remains tough, but policy footing improvements underpin a more optimistic outlook compared with six months (and three months) earlier.
- Downside risks were highlighted, including the U.S. fiscal cliff and uncertainties in Europe; nonactions can generate spillovers as much as actions.

### Medium‑ and longer‑term priorities
- Consensus that the medium‑ and longer‑term narrative is fundamental:
  - Achieve fiscal sustainability.
  - Pursue structural reforms to regain competitiveness and growth.
- Agreement that fiscal adjustment must be credible and medium‑term, but calibrated country‑by‑country:
  - Pace and type of measures depend on each country’s growth prospects, market pressures, and debt burden.
- Fiscal policy must be complemented by other policies:
  - Monetary policy should accompany significant fiscal adjustment with accommodative stances where appropriate.
  - Structural reforms are necessary alongside fiscal and monetary measures.

### Short‑term policy stance and spillovers
- Short‑term measures should support growth while fiscal consolidation proceeds by prioritizing growth‑friendly forms of fiscal consolidation (the right type of tax measures and spending adjustments).
- Emphasis on being conscious of spillover effects from one country’s policies to others, particularly from large economies.

### IMF capabilities and surveillance
- The Fund’s surveillance toolkit is now broader and more integrated compared to two years ago:
  - Better ability to look jointly at sovereign risks and financial risks and their interlinkages.
  - Increased focus on macroprudential risks involving asset markets as well as traditional growth and inflation metrics.
  - Greater attention to spillover effects across economies.

### Global safety net and Fund resources
- Global safety net has increased:
  - At the Spring Meetings members rallied 32 countries to increase Fund resources by 456 billion dollars.
  - Additional contributions have brought the total to 461 billion dollars:
    - Algeria contributed 5 billion dollars.
    - The Sultan of Brunei committed 300 million dollars.
  - Approximately half of that has already been signed by way of bilateral loan agreements.
- Concessional resources for low‑income countries:
  - Replenishment of the Poverty Reduction and Growth Trust (PRGT) approved, enabling use of windfall gold sale profits and supporting concessional lending to low‑income countries.

### Quota and governance reform
- Reaching the conclusion of the 2010 quota and governance reforms and embarking on the next round of quota review.
- Progress reported on governance reform thresholds:
  - Two thresholds reached or exceeded (quota increase and number of countries approving governance reform).
  - Still short on the third item: the quota threshold for governance reform.
  - Expectation that one or two additional countries pressing “yes” would make the reform implementable.
  - If implemented, the reform will bring the four large emerging market economies into the top 10 of the Fund membership.
  - Deadline to continue work on formula reform: January, 2013.
- On the future size of the Fund:
  - The Fund envisaged, at minimum, to be no less than the sum of existing quotas and existing bilateral contributions (the 460 plus billion dollars of bilateral contributions).
  - Further assessment of vulnerabilities and regional developments next year will guide decisions on additional resource needs.

### Accountability and the global policy agenda
- Managing Director announced a forthcoming global policy agenda that:
  - Sets out what the membership should do and what the Fund can do to support recovery and job creation.
  - Will be used to check commitments at the next IMFC meeting in the spring to ensure implementation and mutual accountability.
- IMFC endorsed the recommendation for members to A‑C‑T (act).

### Country and regional issues (selected)
- Europe:
  - The communiqué welcomed ECB monetary transactions and the launch/operationalization of the ESM; further steps are necessary as the process continues.
  - Use of ESM and OMT tools is a matter for eurozone authorities and the ECB to decide when appropriate.
  - Programs, significant reforms, and fiscal adjustments are underway in some countries and are regarded by the IMF as appropriate.
- Japan:
  - The consumption tax law increasing consumption tax from 5 to gradually 10 percent is viewed as a very significant step toward fiscal consolidation.
  - Monetary policy can be expected to play a continuing role and the Bank of Japan would be prepared to do more if appropriate.
- Arab Countries in Transition (ACT):
  - IMF combines on‑the‑ground capacity building and technical assistance (Jordan, Yemen, Morocco, Tunisia, Libya; discussions with Egypt) with international community support.
  - International support can take the form of financial contributions or facilitating market access and foreign direct investment.
  - Japan noted as a principal partner and supporter of the Fund’s technical assistance; referenced a reported 12 million dollars new funds for the region.

### Q&A highlights
- Bilateral loan agreements:
  - China had signed its bilateral agreement prior to the meeting and contributed to increasing Fund resources.
  - No indication in the communiqué that any bilateral contributions are conditional on quota formula changes.
- Ongoing uncertainties and confidence:
  - Complete elimination of uncertainty is impossible, but narrowing uncertainty and renewed commitment to policy implementation were cited as means to reduce it.
- Use of Fund tools and timing:
  - No specific pressure reported by the IMF regarding Spain’s application to OMT; readiness and appropriateness of tools left to eurozone authorities and the ECB.

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## References

- [PRESS CENTER](http://presscenter.imf.org/)
- [https://www.imf.org/external/am/2012/index.htm](https://www.imf.org/external/am/2012/index.htm)
- [Communiqué of the Twenty-Sixth Meeting of the International Financial and Monetary Committee (IMFC)](https://www.imf.org/external/np/sec/pr/2012/pr12391.htm)
- [List of Attendees](https://www.imf.org/external/am/2012/imfc/attendees/index.htm)
- [Webcast](https://www.imf.org/external/mmedia/view.aspx?vid=1897793105001)
- [https://www.imf.org/en/home](https://www.imf.org/en/home)

_Source: https://www.imf.org/en/news/articles/2015/09/28/04/54/tr101312_