IMFC urges rich countries to lead strong, sustained global recovery

• Pages: 118-122

Page 118

Following is the text of the communiqué of the International Monetary and Financial Committee of the Board of Governors of the IMF.

The International Monetary and Financial Committee held its fifth meeting in Washington, DC, on April 20 under the chairmanship of Gordon Brown, Chancellor of the Exchequer of the United Kingdom. The committee welcomes the international community's decisive policy actions, especially following the tragic events of September 11, 2001, to maintain financial stability, restore the momentum of world economic growth, and reinvigorate the fight against poverty.We will also sustain our global action to combat money laundering and the financing of terrorism.

Our meeting in Ottawa last November emphasized the importance of a collaborative approach for the IMF and its members. Going forward, we will continue to work together for sustained, broad-based growth, creating opportunities for productive employment, reducing vulnerabilities, opening up our economies to trade, and providing resources for durable poverty reduction.

Global economy

Since the committee's last meeting, the prospects for the world economy have improved markedly. The challenge now is for governments to help foster the global recovery that is under way. This will require continued vigilance and a further strengthening of medium-term policy frameworks-both to improve prospects for sustainable growth and stability and to reduce vulnerabilities. The committee notes the uncertainties associated with the international security issues around the world and also the deteriorating situation in the Middle East. The committee underscores the importance of stability in oil markets at prices reasonable for consumers and producers.

The advanced economies have a responsibility to promote a strong and sustained world economic recovery.

While keeping inflation under control, monetary policies should remain broadly supportive of growth.

In countries where the recovery is more advanced, consideration may need to be given in the months ahead to reversing earlier policy easing. Reforms should be pursued vigorously, with the aim of improving economic flexibility and resilience, contributing to high and sustainable world growth, and supporting the orderly reduction of persistent imbalances in the global economy.

This process will be helped, in Japan, by decisive action to reform the banking and corporate sectors, along with monetary easing to help end deflation; in Europe, by continued progress with wide-ranging reforms to enhance its growth potential; and, in the United States, by focusing on the efforts needed over the medium term to preserve fiscal balance.

The recovery in industrial countries will contribute to supporting activity in emerging market and developing countries. The committee is encouraged that many emerging market economies have become more resilient through the adoption of sound economic policies-including more sustainable exchange rate regimes. It will, nevertheless, remain crucial to further strengthen fiscal positions and to press ahead with corporate, financial, and institutional reforms to support the emerging recovery and attract foreign direct investment. Improved differentiation and risk assessments by markets have served to limit so far the contagion effects of the Argentine crisis. The committee acknowledges the steps being taken by Argentina to address its difficult economic situation and urges the authorities, in cooperation with the IMF, to move...