INTERNATIONAL MONETARY FUND

Statement by the Managing Director to the IMFC
on the IMF’s Crisis Response and Reform Agenda
April 17, 2009
Crisis response to date. As the world economy has become engulfed in the worst crisis in
many generations, the Fund has mobilized on many fronts to support its member countries.
We have responded with prompt, large and flexible financial support where needed. Our
monitoring, forecasts, and policy advice, informed by a global perspective and by experience
from previous crises, have been in high demand. We have deployed a broad financial safety
net, through an overhaul of our general lending framework that makes it better suited to
members’ needs, and by garnering pledges for a massive increase in Fund resources. And we
have contributed to the ongoing collective effort to draw lessons from the crisis for policy,
regulation, and the global architecture.
Next Priorities. The strong support for the Fund expressed by a wide cross-section of the
membership suggests that we are on the right track. But this is no time to rest. To contribute
as best we can to containing the costs of this crisis, and durably restoring global prosperity
and financial stability, our policy agenda has further to go. Let me set out what I regard as
priorities for the coming months.
Global financial safety net. We will work swiftly to turn loan pledges from members into
effective lending arrangements, and will seek to expand the New Arrangements to Borrow
(NAB) and make it more flexible as a stronger complement to the Fund's quota resources. As
the safety net would not be truly global without adequate coverage of our low-income
members, we must also press forward expeditiously to reach agreement on solutions that
would allow at least a doubling of our medium-term concessional lending capacity. The Fund
needs to do its part in contributing the necessary financing, in a manner consistent with the
new income model agreed by members last year in conjunction with the quota and voice
reform and restructuring of the Fund. However, achieving the desired target would be greatly
facilitated by bilateral contributions from members, both for loan and subsidy resources,
which I urge you to consider. I also intend to move promptly in bringing to a vote a $250
billion SDR allocation to further strengthen the global safety net, and ask for your support.
Lending framework. We need to continue our efforts to adapt our lending framework to the
diverse needs of our members. In the general resources account, the framework has
considerable flexibility and scope for tailoring embedded in it. In particular, the new Flexible
Credit Line, which provides high access financing for eligible countries, without ex post
conditionality, is an exceptionally flexible instrument. Importantly, the new policies on
conditionality, access (including high access precautionary arrangements), and charges, mean
that all of our members with potential financing needs stand to benefit. We must make sure it
is applied consistently with this spirit as we answer our members’ requests for support.
Regarding low-income countries, the available toolkit needs to be more responsive to
increasingly diverse country needs and heightened exposure to global volatility. We will
pursue this objective by redesigning the Fund’s lending instruments to address short-term,
emergency, and precautionary financing needs more effectively, making program design and
the concessional financing framework more flexible, and increasing the flexibility of Fund’s
policy on external debt limits.
Surveillance. In this unsettled environment, surveillance has a key role to play in helping
countries steer through the crisis, while safeguarding sustainability and preventing future
recurrence. Building on recent successful experience, we will enhance our cross country
work and continue to strengthen risk assessments and our analysis of real-financial linkages
and spillovers. Further refinement of our joint early warning exercise with the Financial
Stability Board and a revamped Bank-Fund Financial Sector Assessment Program—more
flexible and targeted and better integrated with the Fund's surveillance—will be instrumental
in this endeavor. But top quality analysis is not enough for surveillance to have traction,
which is what ultimately matters. Enhancing the traction of surveillance is a challenge we all
need to take on. More engaged policy dialogue with members and clearly communicated
messages will be key. So will candor, independence, and evenhandedness.
Architecture. Efforts to build a more robust global architecture need to proceed apace, and
the Fund will continue to contribute to this agenda, in line with its global financial stability
mandate. A key element here will be to solidify perceptions of the Fund as an effective and
legitimate institution beyond the present crisis. In this connection, I cannot overstate how
important a step is the ratification of the April 2008 package of quota, voice, and income
reforms, and I urge you to work toward that objective. We should build on these reforms and
bring representation at the Fund further in line with global economic realities. I would favor
launching the next review of quota and voice in the next few months and completing it by
January 2011—sooner if we can—and hope that this more ambitious timeline draws wide
support. The Fund would serve the global economy better if broader governance reforms
were set in train. The reports on various aspects of IMF reform produced by the eminent
persons’ committee chaired by Trevor Manuel, the G20 Working Group, and the Independent
Evaluation Office will be important inputs.
In sum. The overarching priority remains to respond effectively to this crisis with all
available policy tools, at home and globally, and we need to make sure the policies of the
Fund are well-suited to the task. The remaining agenda is an ambitious and difficult one, as
members come to it from very different perspectives. But I know that we ultimately share the
objective of making the Fund as strong a source of stability in the global financial system as
possible. And recent developments provide comfort that there is considerable political
support for our reform agenda. Against this background, I look forward to a productive
exchange of views to provide further impetus and guidance to this important work.