Chair's opening address: Acharya stresses crisis prevention is key to raising living standards and protecting the poor
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Many millions of people in the world look to the IMF and the World Bank for wisdom in matters of finance and development. Against this background, Mahesh Acharya spotlighted two major challenges facing the two institutions at the dawn of the new millennium. The first is to distill lessons from the recent financial crises. The second is to address the pressing needs of the institutions' most disadvantaged members.
It has been two years since the financial crisis of the late 1990s started in East Asia. Acharya commended the effective response of the Bank and the IMF in supporting reform in the affected countries, a number of which have begun to recover. However, aftershocks continue to affect several countries, exposing weaknesses in the public, financial, and corporate sectors and underscoring the need to protect the poor and the vulnerable. Net long-term flows to developing countries, from private and official sources, are declining, and Acharya stressed that the transfer of resources to developing countries should continue to be a major concern of the international community.
Since last year's Annual Meetings, the outlook for the world economy has improved, although Acharya cautioned against complacency. Not all countries have attained sufficient economic growth to address poverty, and many have been unable to improve income distribution. "We must," he said, "ensure that all countries can benefit from globalization through an orderly and well-sequenced integration into the world economy." In this context, developing countries must participate fully in any new round of multilateral trade negotiations.
The growth of world output is expected to increase moderately next year, although the pattern of growth among the major industrial countries is uneven. Ensuring the continuation of the global expansion will require a significant rebalancing of growth and addressing the existing large external imbalances. Sustaining the recovery in the crisis-hit economies and reducing the vulnerability of all developing countries to external shocks will require the continued vigorous pursuit of structural reforms. This highlights the need to focus on high-quality, broad-based growth to ensure that all levels of society benefit from reform programs.
The ultimate aim of efforts to strengthen the international...
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