IMF to strengthen world economy

April 20, 2011 - 0:0

The Committee of Board of Governors of the International Monetary Fund (IMF) says it is taking necessary actions to strengthen the recovery of the global economy.

Twenty-one African countries under the aegis of the International Monetary and Financial Committee have also advised the IMF to focus on financial sector development in sub-Saharan Africa.
Chairman of the committee of Board of Governors of the IMF, Mr Thaman Shanmugaratnam, spoke in Washington at the Annual Spring Meeting of the IMF and World Bank.
He said although the global recovery was gaining strength, it still remained vulnerable.
“We discussed the significant risks to the outlook and decided to take necessary action to strengthen the recovery.
‘Credible actions are needed to accelerate progress in addressing challenges to financial stability and sovereign debt sustainability,” he said.
According to him, to ensure timely fiscal consolidation in advanced economies, the committee underscores the importance of employment creation for medium-term sustainability.
He stated that the immediate economic impact of the tragic events in Japan and the development in the Middle East and Northern Africa also warranted close attention.
“For policies can have significant cross border effect, we will continue to work together to address policy spillovers and to secure robust and balanced global growth,” he said.
Shanmugaratnam said the committee was committed to accelerated efforts to strengthen resilience of the financial sector to support economic recovery.
He added that progress was needed to address excessive financial risks and strengthen financial regulation in financial centers.
“Recent international agreements on enhancing financial regulation must now be implemented and accompanied by more effective supervision,” he added.
On low-income countries, he said the IMF should continue to provide policy support and financing to help overcome their balance of payment problems.
He said the committee had urged the IMF to refine its tools to assess low income countries’ vulnerabilities and debt sustainability and explore avenues to help their management volatility.
Meanwhile, Governor of the National Bank of Ethiopia noted that although sub-Saharan Africa had limited integration with global financial system and insignificant spillovers, but that this is changing rapidly.
“We, in this regard, want to draw attention to the importance of focusing on financial sector developments in sub-Saharan Africa,” he said.
According to him, this will provide opportunities for strengthening inter-connectedness in the financial sector, noting that without string regulatory institution, financial stability would be compromised.
Commenting on the low income countries, he said that the committee was encouraged by the IMF’s recent vulnerability exercises for the countries.
He suggested that the fund should be more responsive to the financial needs of low income countries.
“The IMF must stand ready to support these efforts through its policy support and financing instruments,” he said.