IMFC sees global slowdown as short-lived, supports IMF's role in crisis prevention

• Pages: 133-135

Page 133

Although short-term prospects for global economic growth have weakened significantly since September 2000, it is likely that the current slowdown will be short-lived, the International Monetary and Financial Committee (IMFC) stated in its communiqué following its April 29 meeting in Washington.While it acknowledged that the "downside risks have increased" since its last meeting in September 2000 (IMF Survey, October 9, 2000, page 314), the IMFC noted that "underlying inflationary pressures generally remain subdued." (For the text of the IMFC communiqué, see page 136.)

Speaking at a joint press conference with IMF Managing Director Horst Köhler following the meeting, IMFC Chair Gordon Brown, the U.K. Chancellor of the Exchequer, emphasized that "the approach to the slowing of the [global] economy is that we would be both forward looking and outward looking."He added: "There was a general recognition of our shared interests as a global community.We recognized that we should not retreat from cooperation but indeed should strengthen it."

In facing economic events, we should be vigilant, Brown said, but we should be forward looking in creating the conditions for growth, in maintaining the momentum for economic reform in our own national economies, and in continuing the pace of reform in the international financial architecture. In particular, he stressed the importance of the communiqué's call for "the resumption of multilateral trade talks [later in 2001] as important to the development of the world economy." (For an edited transcript of the IMFC press briefing, see page 140.)

IMF's crisis prevention role

The IMFC also gave its strong support to the Managing Director's proposals for improving the crisis prevention mechanisms of the IMF, stressing in its communiqué that "strong and effective crisis prevention is a top priority." Köhler said at the press briefing that the Committee's support for recent moves to refocus the IMF and for its current work program would "hasten our progress toward an IMF that is more effective, especially at crisis prevention and promoting financial sector stability."He also disclosed that agreement in principle had been reached at the meeting to provide IMF financial support for the new economic programs of Argentina and Turkey, both of which...