IMFC welcomes plans to ease global imbalances
| Author | Laura Wallace |
| Position | IMF Survey |
| Pages | 101-105 |
Page 101
The world's top economic and financial leaders, in Washington April 14-15 for the Spring Meetings of the IMF and the World Bank, welcomed policy plans from the biggest economies to reduce hefty global current account imbalances. They supported steps being taken to implement a package of IMF reforms, including measures to modernize surveillance, give developing countries more of a say in running the institution, and revamp the Fund's income.
Page 103
Against the backdrop of a bright global economic picture, the world's top economic and financial leaders-who gathered in Washington April 14-15 for the Spring Meetings of the IMF and the World Bank-welcomed policy plans from the biggest economies to reduce the hefty global current account imbalances. They also backed steps being taken to implement a package of IMF reforms, including measures to modernize surveillance, better prevent financial crises, and give developing countries more of a say in running the institution.
The International Monetary and Financial Committee (IMFC), the policymaking committee of the IMF's Board of Governors, welcomed the "continued strong, broad-based expansion of the global economy" and the greater balance in growth among regions. But it warned that "downside risks requiring continued vigilance arise from the possibility of a reassessment of risks in global financial market conditions, of a sharper-than-expected slowdown in the U.S. economy, and of a revival of inflationary pressures as output gaps close or if oil prices rebound." The IMF is forecasting growth of 4.9 percent in 2007 and 2008, down from 5.4 percent in 2006, according to its latest World Economic Outlook.
Box 1 A plan for action on global imbalances
The five parties in the multilateral consultations outlined the following goals aimed at making further progress on an orderly unwinding of global imbalances in the years ahead: China plans to reduce its external imbalances; boost domestic demand, particularly consumer demand, and rebalance investment and consumption; further promote balanced external sector development; speed up financial reform; and further improve the exchange regime "in a gradual and controllable manner."
The euro area plans to further reform the product, labor, and financial markets.
Japan plans to reform the labor market, facilitate foreign direct investment in Japan, strengthen competition in key sectors, and further advance fiscal consolidation.
Saudi Arabia plans to increase spending on social and infrastructure investments and on expanding oil sector capacity.
The United States plans to further fiscal consolidation over the medium term; reform the budget process to contain spending growth; reform entitlement programs to strengthen longterm fiscal sustainability; adopt tax incentives to support private saving; increase energy efficiency; promote pro-growth, open investment policies; and improve capital market competitiveness.
Over the past year, the IMF has convened several...
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