Ministers stress need for orderly unwinding of imbalances
| Pages | 278-280 |
Page 278
Following is the communiqué issued by the International Monetary and Financial Committee (IMFC) of the IMF's Board of Governors after its fourteenth meeting, held in Singapore on September 17. Gordon Brown, U.K. Chancellor of the Exchequer, chaired the session.
Following the call at our last meeting to safeguard and enhance the IMF's effectiveness and credibility, the committee stresses the importance of IMF quota and voice reforms.
The Executive Board has submitted a comprehensive two-year program of quota and voice reforms in a draft resolution to the Board of Governors. Subject to the adoption of the resolution, the September 2006 meetings would initiate an integrated set of reforms, to be completed no later than by the 2008 Annual Meetings. Starting with initial quota increases for China, Korea, Mexico, and Turkey, this package of reforms, when implemented, would make significant progress in realigning quota shares with members' relative positions in the world economy and, equally important, in enhancing the participation and voice of low-income countries in the IMF as set out in the resolution. The committee urges the Executive Board to work constructively and expeditiously on all elements of the reforms so as to garner the broadest possible support, underlines the importance of timely implementation of the program, and calls on the Managing Director to provide a status report at its next meeting.
The committee welcomes the ongoing strong and broadbased global economic expansion. Growth is expected to remain robust in 2007. However, there are downside risks from the possibility of a continued buildup of inflationary pressures, a slowdown in consumption in a number of countries, continuing high and volatile energy prices, and the spread of protectionism. The committee agrees that, in the period ahead, the IMF should focus on supporting its members in promoting policies for reducing global imbalances while sustaining global growth; addressing the impact of high oil prices, in particular on the most vulnerable countries; managing the likely transition to less generous liquidity conditions; and ensuring medium-term fiscal sustainability and financial stability. The committee underscores that reinvigorating the momentum of multilateral trade liberalization is critical so as to sustain and strengthen the foundations of global growth.
In the advanced economies, monetary policy will need to continue solidly anchoring inflation expectations and to balance the relative risks to price stability and growth. The current favorable economic environment provides an opportunity for ambitious fiscal consolidation, backed up with credible policy measures...
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