Taking the Global Pulse

• Pages: 11

Page 11

Over the past year, against the background of a relatively benign global economic environment, the IMF continued to strengthen the effectiveness of its operations and better define its priorities to meet the evolving needs of its members. As part of these efforts, IMF Managing Director Rodrigo de Rato launched a review of the Fund's strategic direction to explore a variety of issues and their implications for the work of the Fund, including global financial flows, regional integration, poverty reduction efforts, and the IMF's own governance.

After global economic growth rose to slightly above 5 percent in 2004-its highest rate in three decades-it has moderated in 2005 toward its trend rate of around 4 1/4 percent.

Generally, inflation has remained subdued, and there has been a marked absence of serious financial crises. Yet the going was not entirely smooth over the past year: oil prices rose sharply and substantially, geopolitical uncertainties continued, global payments imbalances widened further, and many of the IMF's member countries continued to grapple with significant social and economic problems.

Surveillance. In its review of member countries' economic policies, the IMF continued to strengthen its surveillance operations. Following up on recommendations of a 2004 biennial review, the IMF aimed to sharpen the focus of its analysis and advice, including by deepening coverage of exchange rate and financial sector issues, and better integrating analysis of debt sustainability, balance sheet vulnerabilities, and regional and global spillovers. It also sought to improve the policy dialogue with member countries, communicate more effectively with the public, and assess more systematically the effectiveness of surveillance.

Lending. In a review of the conditions the IMF attaches to its financial support for member countries' policy programs, the organization took a thorough look at program design and the application of the 2002 Guidelines on...