Typical street scene in Santa Ana, El Salvador. (Photo: iStock)
IMF Survey : World Finance Chiefs Outline Steps to Spur Growth, Boost Jobs
October 11, 2014
- Global recovery continues but it is fragile and uneven
- Finance chiefs voice support for Ebola-hit countries
- Support for extension of zero interest rate loans for low-income countries
Against the backdrop of a fragile and uneven global recovery, the IMF’s policy steering body—the International Monetary and Financial Committee—met today to discuss ways to boost growth and to foster a sustainable, balanced, and job-rich global economy.
IMFC’s Shanmugaratnam with IMF’s Lagarde: IMFC called on members to implement bold and ambitious measures to boost growth (IMF photo)
IMF-World Bank Annual Meetings
Bold action is needed, especially on structural reforms, said Singapore Finance Minister and IMFC Chair Tharman Shanmugaratnam, referring to changes to the fabric of an economy that can help to jump start growth.
“We all recognize that structural reforms have been too slow and we’ve got to pick up the pace,” he stated, speaking during a press conference on the heels of the IMFC meeting.
“Our single biggest focus is to be on the reforms that enable us to lift potential growth and build a better tomorrow,” Tharman said. “If we don’t focus with urgency on that, we won’t solve even today’s problems. We’ve got to bring the long term into the short term, and that has to be our whole way of thinking about how we complete this recovery process.”
IMF Managing Director Christine Lagarde emphasized the need for swift action on reforms, adding that reforms can spur growth in both the short term and over the long haul.
“Structural reforms and infrastructure investment can address both the demand, short-term side, and the supply, medium-term issues,” said Lagarde.
More growth, more jobs
Lagarde said that she was encouraged by the IMFC’s support and endorsement of the IMF’s work agenda. Going forward, the Fund will focus its efforts on three areas to help the global community achieve stronger growth, specifically:
• First, growth and jobs remain a priority. More infrastructure investment, appropriately designed and implemented, can also help increase growth and jobs.
• Second, spillovers and spillbacks. The membership acknowledged that the Fund is uniquely placed to analyze risks and policy spillovers in a multilaterally consistent manner.
• Finally, the IMF must push on to complete financial sector reform. There was strong support for the Fund’s work with the Financial Stability Board on global regulatory reforms, including on the risks arising from shadow banking, and on making banks better fit to support the recovery.
In its communiqué, the IMFC also endorsed the IMF’s work on international taxation and on sovereign debt restructuring issues. Lagarde added that the IMF will be promoting the use of strengthened collective action clauses, which are already being used by some sovereign bond issuers.
Ebola crisis
Lagarde stressed the urgent situation in the countries affected by the Ebola crisis. The Fund moved quickly to provide a total of $130 million in additional financing to Guinea, Liberia, and Sierra Leone to help them deal with the immediate economic consequences of the Ebola outbreak.
“The purpose is to eradicate Ebola but not isolate the countries themselves,” said Lagarde, noting that all three countries are under IMF financial support programs.
Lagarde also said that she was pleased with the IMFC’s support for the extension of the zero interest rate charged on loans to low-income countries and said she would put a proposal recommending extension forward to the IMF’s Executive Board in the very near future.
Governance reforms
Lagarde said that approval and implementation of the 2010 quota reforms was urgently needed. She said she hoped that the U.S authorities would ratify the agreed governance reforms and the doubling of quotas by the end of the year.