Public Information Notice No. 10/06

Public Information Notice: IMF Executive Board Endorses the Framework for the Fund's Involvement in the G-20 Mutual Assessment Process

January 15, 2010

On December 16, 2009, the Executive Board of the International Monetary Fund (IMF) met to discuss the G-20 mutual assessment process and the Fund’s involvement in it.

Background

In Pittsburgh in September 2009, G-20 Leaders, building on their coordinated efforts to respond to the recent crisis, pledged to adopt policies needed for a durable recovery that would achieve strong, sustainable, and balanced global growth. They pledged to pursue these objectives while maintaining their commitment to fiscal responsibility and sustainability, with reforms to increase growth potential and capacity to generate jobs, and policies designed to avoid asset price bubbles and re-emergence of unsustainable global financial flows. To this end, G-20 Leaders launched a framework for strong, sustainable, and balanced growth, and they committed to develop a process to set out objectives, develop policies to meet these objectives, and assess progress. The Fund was asked to assist this process. In particular, the Fund was asked to analyze how the G-20’s respective national and regional policy frameworks fit together and to develop a forward-looking analysis of whether policies pursued by individual G-20 countries are collectively consistent with more sustainable and balanced trajectories for the global economy.

Executive Board Assessment

Executive Directors welcomed the discussion of the G-20 mutual assessment process and the Fund’s role in this process. They commended the G-20’s commitment to strong, sustained, and balanced growth in the global economy.

Directors welcomed the G-20 members’ request for the Fund to assist in their mutual assessment process, and they adopted the general framework for the Fund staff’s involvement in this process, including the nature and scope of the Fund staff’s contribution. Some Directors were not convinced that the Fund’s involvement should be considered as technical assistance, viewing it instead as part of multilateral surveillance. Directors agreed that this G-20-led process, although separate and distinct from the Fund’s surveillance activities, would complement the latter, and offers an opportunity for the Fund staff to deepen its policy discussions and reinforce traction of its advice with the G-20 members. The Fund’s bilateral and multilateral surveillance would remain independent.

Directors requested staff to develop firmer estimates of the resource implications of the Fund staff’s assistance to the G-20 process when the precise nature of the Fund’s involvement becomes clearer after some experience has been gained.

Most Directors concurred with the envisaged role of the Board laid out in the staff paper, which intends to preserve the G-20 members’ ownership of the mutual assessment process. A number of Directors, however, called for close and formal involvement of the Board with respect to the Fund’s involvement in the G-20 mutual assessment process. In the view of these Directors, such Board involvement would not undermine the staff’s independence or the G-20's ownership of the process. Directors looked forward to being regularly updated on the status of the mutual assessment process and on the Fund’s contribution. In any event, the Board would review the Fund’s role in this process in about one year.