Istanbul will host one of the world’s largest gatherings of financial officials for the IMF-World Bank annual meetings.
Annual Meetings
While the IMF-World Bank Annual Meetings in Istanbul are still three months away, officials at the two multilateral lenders are assessing the likely next phase of the crisis and trying to spot signs of recovery.
Turkish officials, from the Central Bank to the Finance and Health Ministries, are part of a planning team arranging and coordinating all the details that go into hosting a meeting of this size and importance, which will be held at Congress Valley, located near the Bosphorus.
“All eyes will be on Istanbul,” said Murilo Portugal, Deputy Managing Director at the IMF, on a recent trip to the host country. “The annual meetings are a unique opportunity to discuss issues of great global economic importance, make decisions and provide guidance on the work of the two institutions.”
As a key member of the Group of Twenty (G-20) industrialized and emerging market countries, Turkey has not escaped the effects of the global crisis, but the economy has displayed resilience and flexibility.
Unique gathering in Istanbul
The IMF and World Bank annual meetings in October bring together finance ministers, central bankers, and other top officials from 186 countries to discuss the critical issues facing the world economy.
Every three years, the meeting is held outside Washington, D.C., and this will be the second time Turkey will host the gathering. The previous time was in 1955.
The meetings are also a forum for policymakers to meet with civil society organizations and the private sector. The IMF has begun holding informal meetings with these groups and will continue to do so as officials from the Fund travel to Turkey over the next few months.
Turkey and the IMF have already jointly hosted a meeting on public debt, which is at the heart of the public policy debate on eventual exit strategies from the crisis. Senior officials, including Murilo Portugal and IMF First Deputy Managing Director John Lipsky, visited Turkey in June as part of the Fund’s work to draw attention to the key issues leading up to the discussions in October.
A program of seminars is planned in the days immediately preceding the annual meetings, which will cover a wide range of topics from the best policies to deal with and prevent crises, and the future of the global financial system. Senior IMF officials, leading academics and journalists, and current as well as former government officials will debate the issues over the course of two days.
A website for the event has been launched, which is a key vehicle for providing information as well as receiving feedback from all groups interested in the discussions that will take place during the meetings.
The host country is expecting over 13,000 participants to attend the meetings over the course of several days. The IMF’s policy advisory group, the International Monetary and Financial Committee will meet on October 4, and the Development Committee will meet on October 5. These meetings are an opportunity for the Ministers of Finance and Central Banks Governors from all countries to get together to discuss global economies issues and give guidance to the IMF.
The Annual Meetings follow on October 6 and 7.
Taking stock of the crisis
Top of the agenda is likely to be the state of the global economy and the policy responses that countries have taken to combat the worldwide recession. The world economy is starting to pull out of the worst recession since the 1930s, but stabilization is uneven and recovery is expected to the sluggish, according to the IMF’s latest forecast.
In line with IMF advice, countries have responded with innovative monetary policy and poured liquidity into the markets. On the fiscal policy front, the IMF called for a 2 percent global stimulus, which countries have largely delivered.
Other issues on the agenda will likely include discussion of possible early warning systems that could highlight when economies are getting into trouble, possible exit strategies to unwind the large stimulus packages, the imbalances between the large economies and the risk posed to the global economy, the future shape of the international financial system, and examination of the effectiveness of the IMF’s crisis lending.
A record of speed and flexibility
When the crisis hit, the IMF was quick to respond and provided flexible lending to countries in need, particularly for emerging markets and low-income countries. The fund has lent a record $157 billion since the crisis began, with a doubling of concessional lending, and a commitment from leaders to triple funds available to $750 billion.
The historical stigma of borrowing from the Fund has been replaced with countries coming to the Fund before they are in dire straits, and the institution has set up a Flexible Credit Line for countries with a solid economic track record. Colombia, Mexico, and Poland have taken advantage of this new arrangement, but have not yet drawn on the funds available to them.
The IMF has changed how it lends, with larger amounts available with fewer restrictions, and has adapted to meet the constantly changing circumstances in countries.
While they had nothing to do with the creation of the crisis, the poorest countries were the most vulnerable to its effects. So the IMF has paid particular attention to how it can help, with $1.6 billion in new lending to sub-Saharan Africa by the end of June this year. The IMF also gave the low-income countries more flexibility on inflation targets and has factored in higher deficits and spending for the year.
Reforms for a stronger IMF
Along with the crisis, the IMF is committed to reforming the way it is run. The fulfillment of outstanding governance reforms is a first step in increasing the share of dynamic emerging markets and preserving the voice of low income countries. First and foremost, the quota and voice reforms approved in 2008 need to be formalized.
Once in place, 54 members will receive an increase in their quotas, some of the largest gains going to China, Korea, India, Brazil, and Mexico.
This is a just a first step in ongoing reforms. The G-20 has called for completion of the next step in improving representation for emerging and developing countries by January 2011, with work to start on a new quota formula by October 2009.
How the Fund is financed is also a part of the reform process, and in early July, the institution decided to issue bonds for the first time in its history. China has indicated it will invest up to $50 billion, and Brazil and Russia up to $10 billion each.
Comments on this article should be sent to imfsurvey@imf.org
