IMF-World Bank Annual Meetings: Ministers call for bold actions to sustain global economic recovery
| Author | Laura Wallace |
| Position | Editor |
| Pages | 277-279 |
Page 277
Not on the agenda of the meetings, but much discussed on the sidelines, was financial help for Iraq. On September 29, the IMF approved $436.3 million in emergency postconflict assistance as a sign of support for reconstruction efforts through 2005 and to help catalyze additional international aid, including debt relief. The IMF loan was made possible by Iraq's having settled its $81 million in arrears to the IMF a week earlier. In addition, the bulk of Iraq's official bilateral creditors have reaffirmed their recognition of the IMF's preferred creditor status and indicated their willingness not only to make their best efforts to provide timely debt relief but also to defer Iraq's obligations falling due to them during the period of the program supported by the emergency postconflict assistance, which goes through 2005. Debt relief negotiations are expected to start soon under the aegis of the Paris Club. Several of Iraq's non-Paris Club creditors have indicated that they will follow the lead of the Paris Club regarding debt relief for Iraq.
For the economic policymakers, the top agenda item was sustaining the global economic recovery. IMF Managing Director Rodrigo de Rato-attending the Annual Meetings for the first time as IMF chief- told delegates that over the past year, the recovery has become increasingly well established, with global GDP growth in 2004, at 5 percent, expected to be the highest in nearly three decades (see page 280). The IMF is forecasting that global growth will moderate Page 278 to 4.3 percent next year, partly reflecting the effects of higher oil prices (see World Economic Outlook, page 295). He also noted that financial markets have generally responded well to the start of the transition to higher interest rates. "In short, the world economy has mounted a vigorous recovery from the slowdown of 2001," he said, adding that "this is a remarkable performance in the face of the shocks experienced in the past few years."
Even so, de Rato cautioned, this is no time for complacency, with the risks to the forecast on the downside. To sustain recovery, policymakers need to monitor carefully the near-term effects of higher oil prices on their economies, ensure an orderly transition to higher interest rates, and tackle current account imbalances. On the last point, he urged the United States to reduce more energetically its hefty fiscal deficit...
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