Group of 24 communiqué: Underrepresentation of developing countries puts credibility of IMF, World Bank in question

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Global economic prospects

Ministers welcome the continued strengthening in global growth prospects, but note that significant downside risks remain, including ongoing large payments imbalances, the move toward a higher interest rate environment, the volatility of oil prices exacerbated by downstream supply constraints, and serious geopolitical concerns. Moreover, while economic growth has become increasingly broad-based, some regions continue to lag behind. In particular, growth in sub-Saharan Africa, while improving over the recent period, remains at levels inconsistent with achieving sustained poverty reduction and reaching the Millennium Development Goals (MDGs).

Ministers consider that, while the significant fiscal expansion and accommodative monetary policy in the United States have helped to support the global recovery, resolute action will be needed over the medium term to return fiscal policy to a sustainable path and address the large current account deficit. This would help to minimize the risk of disorderly exchange rate movements and a sharp increase in interest rates that would undermine the global recovery. In addition, the growing U.S. external imbalance and the diversion of a substantial portion of world savings from developing countries to the largest and highly capitalized economy constitute a misallocation of resources and pose a serious short- and medium- term challenge for the international economy.

Ministers believe that higher growth in the European Union is essential to the continuation of the global recovery process, and see a need for maintaining an accommodative monetary policy stance and for a deepening of structural reforms. They welcome the recovery of the Japanese economy, and encourage the authorities to address the lingering imbalances in the financial and corporate sectors to help boost domestic sources of growth. Ministers recognize the strong contribution that emerging market economies are making to the global recovery, and encourage a greater role for these countries in international economic policy coordination. Ministers welcome the ongoing efforts made by oil-producing countries to stabilize the oil market. These efforts should be supported by closer consumer-producer cooperation.

Ministers consider that to effectively address global imbalances and to sustain high growth momentum, a cooperative multilateral approach is essential, and call upon the IMF to undertake a more proactive role in this area and to enhance the effectiveness of its surveillance of major economies.

Ministers remain deeply concerned about the deteriorating situation in the occupied Palestinian Territories, the construction of a wall in the West Bank, and its adverse social and economic ramifications on the Palestinian people. They call on the IMF and the World Bank to intensify their assistance to the Palestinian people. Ministers are concerned about the economic and security situation in Iraq, and call on the Bretton Woods institutions and other donors to intensify their assistance and accelerate the disbursement of aid pledged at the Madrid Donors Conference in October 2003. Ministers welcome the Emergency Post-Conflict Assistance (EPCA) that the IMF is providing to...