IMF Policy-Steering Body Aims for Balanced, Job-Rich Global Economy

Global economy strengthening but growth subpar and uneven

World finance chiefs pledge to work together to spur recovery

Structural reforms key to creating jobs, unleashing sustainable growth

“We need a new balance in policies that meets the needs of a new phase of the economic recovery globally,” said Singapore Finance Minister Tharman Shanmugaratnam, who chaired the twenty-ninth meeting of the IMFC.

“This doesn’t mean a sudden withdrawal of macroeconomic policies—especially monetary policies—that support the recovery. But it does mean much greater focus on structural reforms,” Tharman said.

Old and new risks

Tharman highlighted a few key areas that merit greater attention, according to the IMFC.

In addition to the need for structural reforms—such as repairing balance sheets, strengthening banking systems, and improving the functioning of labor markets—he cited a few key risks to the global economy. Risks to financial stability—not only legacy risks but also new ones—were of particular concern, such as an increase in corporate debt in some countries that is not matched by growth in investment.

He also noted concern about the continued risk of volatility in capital flows to emerging markets. This heightened risk partly reflects a change in the structure of global finance—there is not just a higher volume of capital flows but also a change in the composition of these flows.

Geopolitical risks also warrant vigilance, Tharman said, noting that the IMF plays an important role in helping stabilize geopolitical crises and de-escalate the associated economic risks.

Not just more, but also better growth

IMF Managing Director Christine Lagarde emphasized the need to sustain the global recovery through the pursuit of better, more inclusive, and more balanced growth.

She noted the IMFC’s strong endorsement of her Global Policy Agenda, which provides encouragement for the IMF to move forward with what it can offer the global community to promote growth.

The IMF’s work on inequality supports the quest for inclusive growth, Lagarde said. She added that higher quality growth—where such factors as climate change and environmental degradation are taken into account—is critically important. This is also an area of focus for the IMF’s work.

“We’ve worked on the removal of energy subsidies; we will soon be publishing work on the setting of the right price for energy,” Lagarde noted. For all issues of macroeconomic relevance, she said, the IMF will...