Intergovernmental Group of Twenty-Four on International Monetary Affairs and Development

IMF News, October 6, 2016

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• Published: October 6, 2016

Meeting and Leadership

• Ninety-sixth meeting held in Washington D.C. on October 6, 2016.
• Chair: Mauricio Cárdenas, Minister of Finance and Public Credit of Colombia.
• First Vice-Chair: Abdulaziz Mohammed, Minister of Finance and Economic Cooperation of Ethiopia.
• Second Vice-Chair: Ravi Karunanayake, Minister of Finance of Sri Lanka.
• IMF Communications Department contact: Phone: +1 202 623-7100 Email: MEDIA@IMF.org

Key Communiqué Findings on the Global Economy

• Concern with prolonged weakness in the global recovery and increasing levels of inequality.
• Global demand described as weak; growth outlook in advanced economies (AEs) remains subdued.
• Growth prospects of emerging market and developing countries (EMDCs) are improving but vary greatly; some commodity exporters experiencing a sharp slowdown.
• High downside risks identified:
  • Monetary policy normalization in the U.S.
  • Rebalancing in China
  • Volatile financial markets
  • Political tensions
  • Uncertainties related to Brexit
  • The refugee crisis
• Call for a broad-based policy response, including coordinated measures, and commitment to using all policy measures (monetary, fiscal, structural reforms) to boost growth and global demand.

Multilateral and IMF-related Priorities

• Support for strengthening the IMF’s lending toolkit and technical assistance to address diverse country needs, including instruments for sharp drops in commodity prices and non-economic shocks.
• Emphasis on special attention to difficulties faced by commodity-exporting countries, particularly low-income countries (LICs).
• Support for strengthening the Global Financial Safety Net (GFSN) with an adequately-resourced, quota-based IMF at its center.
• Welcome for IMF initiatives to develop synergies with regional financial arrangements while respecting institutional arrangements.
• Call for more even-handed IMF surveillance, program-design, and monitoring tailored to country-specific circumstances.
• Welcome for stocktaking of the International Monetary System and IMF’s review of country experiences in handling capital flows.
• Welcome for the official inclusion of the Renminbi in the Special Drawing Rights (SDR) basket in October 2016 and exploration of options for broader use of the SDR.

Trade, Inequality, and Financial Inclusion Concerns

• Note with concern:
  • Slowdown in growth of global trade.
  • Increase in protectionist trends and backlash against globalization, mainly in AEs.
• Risks: inward-looking policies pose serious risks to global growth and EMDC prospects.
• Policy emphasis:
  • Coordinated policies to ensure benefits of global integration are more widely shared.
  • Reducing within-country inequality to boost growth.
  • Resisting protectionist measures and fostering multilateral trade environment for goods, e-commerce, and services.
• Call to address decline of correspondent banking relationships (CBRs); note FSB Action Plan and expectation of tangible results.
• Welcome FSB work on vulnerabilities from market-based finance and concern about adverse effects of illicit financial flows; call for strengthened IMF and WBG support, including through Stolen Assets Recovery Initiative (StAR).

Refugee Crisis and Non-Economic Shocks

• Welcome WBG initiatives to support EMDCs disproportionately affected by the refugee crisis and other non-economic shocks.
• Support for the Global Concessional Financing Facility and WBG report on “Forcibly Displaced”.
• Encourage continued IMF analytical work on economic impact of conflicts and refugee crisis in the Middle East and North Africa.
• Call for more work and coordination among international organizations on migration and development.

Inclusive and Sustainable Growth Priorities

• Boosting and sustaining growth and improving livelihoods central to achieving the Sustainable Development Goals (SDGs).
• Emphasis on economic diversification and mitigation of external shocks for commodity-exporting and agro-dependent countries.
• Policy measures highlighted:
  • Improve agricultural productivity and industrialization, including agro-industry.
  • Tap digital technology potential and integrate more effectively into global value chains.
  • Improve social protection, broaden financial inclusion, address under-employment and unemployment (including youth), and foster female labor force participation.
  • Scale up support from IMF, WBG, and other international organizations to achieve inclusive and sustainable growth and realize the SDGs.
  • Mobilize financing for and facilitate South-South cooperation; integrate asset-based financing practices into global finance.

Infrastructure, Finance, and MDBs

• Vital importance of increasing investment in infrastructure in EMDCs to boost demand, support inclusive growth, and reduce poverty.
• Investment in green infrastructure emphasized to support climate goals.
• Necessary measures:
  • Strengthen public investments and efficiency.
  • Prepare pipeline of bankable projects.
  • Encourage and enhance private sector participation to crowd in capital.
• Note that some EMDCs can scale up infrastructure; others face narrowing fiscal space and tighter external financing.
• Call for ambitious efforts by Multilateral Development Banks (MDBs) to support sustainable infrastructure financing and crowd in private resources.
• Welcome MDBs’ efforts to optimize balance sheets while safeguarding financial strength and call for dialogue on adequate capitalization.
• Welcome IMF’s infrastructure policy support initiative to strengthen public institution capacity and raise growth payoff while preserving debt sustainability.
• Welcome G20 Hangzhou Action Plan emphasis on infrastructure.

Taxation, Debt, and Concessional Finance

• Support for enhanced IFI and donor support for capacity building on domestic resource mobilization.
• Support for Addis Tax Initiative and Platform for Collaboration on Taxation by IMF, OECD, UN and WBG.
• Encourage all countries to join the BEPS inclusive framework on an equal footing; encourage developing countries to sign the Convention on Mutual Administrative Assistance in Tax Matters.
• Call for greater participation of developing countries in Committee of Experts on International Cooperation in Tax Matters and upgrade to intergovernmental level.
• Stress importance of improving international standards on tax transparency and exchange of beneficial ownership information.
• Note ongoing review of the Joint World Bank-IMF Debt Sustainability Framework for Low-Income Countries scheduled for completion by year-end; call for a forward-looking and more flexible framework that recognizes productive and social investments.
• Encourage timely consultations with LICs and continued use of enhanced contractual clauses in sovereign debt issues; take note of large stock of sovereign debt lacking these provisions and support exploring solutions for holdout problems.
• Reiteration that concessional finance remains important for LICs and call for developed countries to fulfill ODA commitments.
• Look forward to successful 18th replenishment of International Development Association (IDA).
  • Stress necessity of preserving IDA’s concessionality.
  • Call to smoothen graduation of IDA countries by providing transitional support and waiving acceleration repayments clause.
  • Support proposal to create an IDA private sector window under IFC and MIGA and focus on fragile and conflict situations (FCS).
  • Support proposal of doubling IDA allocations to FCS and urge World Bank to facilitate implementation.
  • Urge international community to work with small middle-income countries to improve debt sustainability, including access to concessional financing.
  • Call for more representative governance structure in IDA to increase voice and participation of EMDCs.

Climate Finance and COP 22

• Call for a concrete roadmap from developed countries to meet Climate Finance commitments to support EMDCs implementing INDCs.
• Emphasize provision of finance largely through grants from developed countries for addressing climate change.
• Look forward to successful COP 22 meeting in Marrakech, Morocco in November 2016.

Reform of Bretton Woods Institutions

• Support for a quota-based, adequately resourced IMF less dependent on borrowed resources.
• Call for full implementation of 2010 IMF Quota and Governance Reforms, including Board Representation.
• Call for early completion of the 15th General Review of Quotas including:
  • A new quota formula that shifts quota shares to dynamic EMDCs, reflects growing weight in the global economy, protects quota share of poorest countries, and puts greater weight to GDP PPP within the GDP blend.
  • Realignment of quotas must not come at expense of other EMDCs.
  • Reiteration of call for a third Chair for Sub-Saharan Africa in the IMF Executive Board provided it does not come at expense of other EMDCs’ Chairs.
  • Call for Fund to update country-classification into EMDC and AE groups consistent with economic position on governance issues.
• On WBG shareholding review:
  • Reiterate centrality of Istanbul Principles to enhance voice and representation of developing and transition countries (DTCs) and achieve equitable voting power between DTCs and developed countries while protecting smallest poor countries.
  • Note recent agreement on the dynamic formula as an input to realigning voting shares.
  • Caution against regressive outcomes that could compromise 2010 reform gains.
  • Take note of Governors’ formula guidance that outcomes should be broadly acceptable to membership.
  • Underscore commitment to increasing voting power of DTCs as a group and call for exploring options (forbearance, cap of dilution of individual DTCs, increasing basic votes) and consideration of different options to increase set basic votes.
• Welcome WBG’s Forward Look exercise and support continued assistance to reduce poverty, ensure shared prosperity, and achieve the SDGs across diverse country groups while focusing on poorest and countries affected by fragility and conflict.
  • Welcome creation of the Global Crises Response Platform.
  • Emphasize scaled-up support for quality infrastructure investments, resilience to natural disasters, and coping with rapid urbanization.
  • Support efforts to crowd in more private financing; note Forward Look proposal of a large increase in annual lending from IBRD and need to build WBG financial strength.
  • All options to strengthen financial capacity of IBRD and IFC should be considered.
• Welcome WBG’s modernized Environmental and Social Framework and request for implementation plan and Guidance to staff to facilitate transition to nationally adaptive engagement modalities.
• Call for strengthening IMF and WBG efforts toward greater representation of under-represented regions and countries in recruitment and career progression to achieve balanced regional and gender representation, including managerial levels; reiterate importance of staff diversity and gender balance, including diversity of educational institutions.

Other Matters and Meetings

• Thanks to Colombia for its Chairmanship; welcome Ethiopia as incoming Chair and Peru as Second Vice-Chair.
• Next G-24 Ministers meeting expected on April 20, 2017 in Washington, D.C.
• List of participants and observers documented for the October 6, 2016 meeting, including Ministers, Deputies, African Group, Asian Group, Latin American Group, Observers, Special Guests (Christine Lagarde, Jim Yong Kim, Kundapur V. Kamath), G-24 Secretariat, and IMF Secretariat for the G-24.

Source: Intergovernmental Group of Twenty-Four communiqué, October 6, 2016.

References

• http://www.imf.org/external/am/2016/index.htm
• https://prd-sitecorecm.imf.org/EditorPage.aspx?da=core&di=0&ed=&fbd=1&fld=%7B1DC78734-EC8A-44EB-B9C6-BF7935BA25BB%7D&hdl=H5241767313&id=%7B080B4900-DD9B-44E0-97CF-091F4DCA2BE1%7D&la=en&mo=&pe=1&so=%2Fsitecore%2Fsystem%2FSettings%2FHtml+Editor+Profiles%2FRich+Text+Full&vs=1
• Colombia and the IMF
• Sri Lanka and the IMF
• The Federal Democratic Republic of Ethiopia and the IMF
• IMF Quotas -- A Factsheet
• Communiqués
• PRESS CENTER
• https://www.imf.org/en/home