IMF, With Firewall Pledged, Targets Growth and Jobs

IMF members pledge over $430 billion to protective firewall

Focus now on restoring "normal" level of growth within 2-3 years

Reaffirm aim to complete quota, governance reforms by October

Singapore Finance Minister Tharman Shanmugaratnam, who chairs the policy-setting International Monetary and Financial Committee (IMFC), said ministers and central bank governors gathered in Washington focused on the “real sustainable solutions to this crisis that the firewall is meant to support.”

Calling the strengthening of the global safety net an “important step forward,” he told reporters that the main emphasis must remain on fiscal and structural reforms to put economies on a firmer footing. While getting budgets and debt under control was important, it was equally important to spur growth and get it back to normal levels within 2–3 years. Without growth, fiscal sustainability was not possible.

Collective approach

Christine Lagarde, Managing Director of the IMF, said the spirit and dynamic of the IMF-World Bank Spring Meetings amounted to the “Washington moment” that she had been seeking to drive forward a collective solution to the crisis.

The Group of Twenty (G-20), along with the IMFC, on March 20 announced collective pledges of more than $430 billion to the 188-member IMF—doubling its lending capacity—to help build confidence and prevent crises from spreading.

Although the global economy is slowly improving again, the IMF has said in its latest World Economic Outlook (WEO) report that growth this year is expected to be weak, especially in Europe, and unemployment in many advanced economies will stay high.

Although action by policymakers in Europe and elsewhere has helped to reduce vulnerabilities, risks of a renewed upsurge of the crisis in Europe continue to loom large, along with geopolitical uncertainties affecting the oil market.

Since the start of the global economic crisis in 2007, the IMF has committed more than $300 billion in loans to its member countries. In response to the crisis, the IMF also reformed its policies toward low-income countries and quadrupled its concessional lending.

Strong resolve

Tharman said he saw a courageous and strong resolve to tackle the difficult issues of competiveness, debt, and thrift and build a better future. “We know it’s going to be a long road and a multiyear journey...