The partial recovery of world economic growth seen in 2002, following the slowdown of the previous year, has been broadly sustained in 2003, with some indications in recent months that it has gained strength. The outlook is for growth to strengthen further in late 2003 and 2004, but the balance of risks is still slanted to the downside, though less so than earlier this year. Risk factors weighing on the outlook include global payments imbalances (particularly the large U.S. current account deficit) and the possibility of continuing repercussions of the bursting of the equity market bubble and of further increases in long-term interest rates following their recent sharp upturn.
Against this backdrop, the IMF has focused on promoting policies that support economic recovery and raise growth prospects. In addition to its traditional surveillance, lending, and technical assistance operations, the IMF has been strengthening the framework for preventing crises and for resolving the crises that do occur.
To strengthen surveillance and crisis prevention, the IMF is sharpening its analysis of vulnerabilities, such as debt sustainability, and emphasizing financial sector surveillance, including through the joint IMF-World Bank Financial Sector Assessment Program. The IMF is paying increased attention at the country, regional, and global levels to the external implications of nationalPage 2 policies. It is also encouraging countries to include collective action clauses in sovereign bond contracts (as Mexico and Uruguay have done in their recent bond issues) and is supporting efforts by debtors and creditors to develop a voluntary code of conduct during debt restructuring.
Meanwhile, to make its lending decisions in crises more predictable for member countries and financial markets, the IMF has clarified the criteria for access to its resources. The guidelines for the policy conditionality associated with IMF lending have been revised to enhance the country ownership and effectiveness of the policy programs the IMF endorses.
The IMF remains fully committed to achieving the UN Millennium Development Goals. It has continued its work on reinvigorating the fight against poverty in low-income...