core sector communique

IMF Sets Out Work Program, Focus on Growth, Financial Stability and International Monetary System

May 26, 2011

The International Monetary Fund (IMF) will focus its efforts for the period ahead on three priority areas: spurring growth while bolstering economic and financial stability; strengthening the international monetary system; and continuing to adapt efforts to support low-income members, IMF Acting Managing Director John Lipsky said in presenting the IMF's bi-annual work program.

“One theme cutting across these areas is our ongoing efforts to transform and strengthen our economic surveillance, in order to help policy-makers anticipate and react effectively to emerging challenges,” Mr. Lipsky told the IMF Executive Board during the presentation of the work program. For the Fund this means in particular improving understanding of policy spillovers and interactions across major economies, and enhancing its engagement with policymakers on these issues, he noted.

The work program, published today, highlights efforts in these areas, while underscoring that the complex global economic landscape, in which the strength and quality of recovery varies widely across regions, continues to make global policy cooperation as critical as it was at the peak of the crisis. “Participants at our recent Spring and G-20 meetings shared this view, and I am heartened that the commitment to policy cooperation is alive and well,” said Mr. Lipsky.

Growth and Stability

New spillover reports—aimed at highlighting the interconnected nature of the global economy—on China, Euro Area, Japan, United Kingdom, and the United States will be discussed by the Executive Board along with the relevant Article IVs in July 2011. A new IMFC consolidated multilateral surveillance report from the Managing Director to the IMFC will draw on the IMF’s established multilateral surveillance products (e.g. World Economic Outlook, Global Financial Stability Report, Fiscal Monitor, Spillover Reports) and will examine the principal policy challenges facing Fund member countries. The IMF will continue to support the G-20 Mutual Assessment Process (MAP), with its own involvement to be assessed in the Review of the Fund’s involvement in the G-20 MAP.

Recognizing that a focus on GDP growth alone is not sufficient, the IMF will also be looking into issues—both at the country level and in its cross-country work— related to the quality, sources and distribution of growth as well as job creation—important dimensions of sustainability. The Executive Board will also discuss a new framework to assess debt vulnerabilities and policies to ensure fiscal transparency and sustainability, as well as issues related to macroprudential policy implementation and data gaps that impede adequate surveillance of global financial risks.

Strengthening the International Monetary System

Work will continue on: better management of capital flows, with particular attention to the multilateral effects of policies on capital flows both in source and recipient countries; an enhanced global safety net, through in-depth analysis of cross-border linkages and experience with systemic crises; and diversifying the international currency and reserve system, including through a possible expansion of the basket of currencies making up the Special Drawing Rights (SDR). Further, the Review of Conditionality and the Design of Fund-supported Programs will examine Fund support during the crisis.

The Triennial Surveillance Review and Review of the 2007 Decision on Bilateral Surveillance, will formulate concrete proposals to strengthen surveillance, including the identification of risks, surveillance of countries that pose the largest systemic risks, and the coherence and integration of surveillance products.

Helping Low-Income Countries Manage Volatility

The Executive Board will consider how the Fund can step up efforts to help LICs deal with challenges posed by recurring macroeconomic volatility, particularly from rising food and energy prices, and the role of contingent financial instruments in this context. In addition, the Board will discuss the particular challenges faced by countries in fragile situations, and review the implementation of the Heavily Indebted Poor Countries (HIPC) Initiative and Multilateral Debt Relief Initiative (MDRI).

“I have no doubt that we can meet all the challenges we are facing effectively, efficiently and expeditiously,” Mr. Lipsky concluded, noting that the IMF would continue to fulfill its duties and unique responsibilities regardless of management succession.