Press Release No. 10/261

Press Release: IMF Managing Director Dominique Strauss-Kahn Welcomes G-20 Actions to Secure a Strong and Sustained Global Recovery

June 27, 2010

Mr. Dominique Strauss-Kahn, Managing Director of the International Monetary Fund (IMF), today welcomed the actions of the Group of 20 nations in Toronto, Canada, to sustain the global economic recovery and lay the basis for strong, sustainable and balanced growth.

He particularly noted the Leaders’ resolve to cooperate--in a multilateral context—to encourage economic growth, promote job creation, and enhance global prosperity. He stated, “I am encouraged by the conclusions of the G-20 Summit, including the active engagement of the Leaders in developing the G-20 Framework for Strong, Sustainable and Balanced Growth.”

The G-20 Leaders agreed in Toronto to develop a comprehensive action plan to be finalized at the Seoul Summit. "This initiative holds out great promise. “IMF analysis in support of the G-20 Mutual Assessment Process shows that appropriate collective action could increase global GDP by 2.5 percent over the medium term, creating tens of millions of jobs, lifting tens of millions more out of poverty,” Mr. Strauss-Kahn said.

Mr. Strauss-Kahn noted that more robust growth is needed both to reduce unemployment and to lessen the burden of large public debts. “The G-20 Mutual Assessment Process is the mechanism through which the growth challenge can be addressed. It points to three areas for action. First, fiscal consolidation in advanced countries is unavoidable. This means putting in place now credible fiscal plans, mostly starting in 2011, since the recovery is still fragile. Second, economies with surpluses need to boost internal demand, for example by spending on social safety nets, improving infrastructure, and allowing exchange rate flexibility. And third, structural reforms, especially in the advanced economies—encompassing changes in goods and labor markets that will lift growth, and financial reform that will make it sustainable.”

Mr. Strauss-Kahn noted that the Toronto Summit had made progress toward a comprehensive set of new standards to enhance the strength and stability of the financial sector. “I am heartened by the renewed commitment by G-20 Leaders to implement the financial sector reforms agreed to in London and Pittsburgh. A healthier and safer financial sector will supply the credit needed to finance recovery and serve the needs of the real economy. I am also encouraged that Leaders agreed on principles that will guide the design of measures to ensure financial institutions pay a fair and substantial contribution towards burdens associated with government interventions to repair the financial system or fund resolution.”

Lastly, the Managing Director welcomed the G-20’s support of the IMF, including the commitment to accelerate work in order to complete IMF quota reforms by the Seoul Summit in November, and to deliver in parallel on other governance reforms, in line with the Pittsburgh Summit commitments. “Today’s commitments will bolster IMF legitimacy and credibility. Much remains to be done until Seoul. Commitments to ratify the 2008 Quota and Voice Agreement, as well as recent reforms to the New Arrangements to Borrow, will require follow through. Beyond this, there is difficult work to be done to deliver on the new set of reforms. But I am confident that our membership will rise to the challenge,” Mr. Strauss-Kahn underlined.

Background

Mutual Assessment Process Report:

http://www.imf.org/external/np/g20/pdf/062710a.pdf

Financial Sector Taxation Report:

http://www.imf.org/external/np/g20/pdf/062710b.pdf

IMF Financing:

http://www.imf.org/external/np/exr/facts/finfac.htm