IMF members pledge to boost trade and spending

IMF chief Christine Lagarde has urged nations to do more to boost growth.
IMF chief Christine Lagarde has urged nations to do more to boost growth.

Nations underline commitment to jobs-rich growth to counter rising backlash to globalisation

WASHINGTON • The International Monetary Fund's (IMF) member countries have pledged to revive flagging global trade, boost government spending and remove barriers to business to fight weak growth that has left too many people behind.

Saturday's pledge came as world finance leaders at the IMF and World Bank annual meetings in Washington fretted over a rising populist backlash against trade and globalisation.

"The persistently low growth has exposed underlying structural weaknesses and risks further dampening potential growth and prospects for inclusiveness," the fund's steering committee said.

Britain's vote in June to leave the European Union, US Republican presidential candidate Donald Trump's anti-trade rhetoric and a global slowdown in trade volumes have prompted policymakers to try to do a better job at selling the benefits of global economic integration.

The IMF's international monetary and financial committee said that uncertainty and downside risks to the global recovery were elevated, and that the recovery was increasingly threatened by protectionist policies and stalled reforms.

"We reinforce our commitment to strong, sustainable, inclusive, job-rich and more balanced growth. We will use all policy tools - structural reforms, fiscal and monetary policies - both individually and collectively," it said.

The committee, made up of representatives of the fund's 189 member countries, also included a pledge to "design and implement policies to address the concerns of those who have been left behind and to ensure that everyone has the opportunity to benefit from globalisation and technological change".

IMF managing director Christine Lagarde has urged countries to do more to boost growth by spending more on infrastructure and education and to rely less on loose monetary policy that has already reached the limits of its influence.

She has also sought more pro-market reforms in many countries. "We certainly decided to come up more loudly on this occasion to say central bankers cannot be the only game in town," Ms Lagarde told a news conference.

"Let's get on with it and see some action on the part of the other authorities as well," she said.

The members repeated their pledge to refrain from competitive currency devaluations, to not target exchange rates for competitive purposes and to clearly communicate their policy stances.

"We will also redouble our commitment to maintain economic openness and reinvigorate global trade as a critical means to boost global growth," they said.

The committee also said it would "intensify" efforts to deal with bad loans and other financial sector problems left over from the last financial crisis.

The IMF statement said that 26 countries had pledged US$360 billion (S$494 billion) in bilateral financing to supplement the fund's normal lending resources.

The members agreed with Ms Lagarde's proposal to delay the next review of the fund's "quota" shareholding system by about two years.

They pledged to complete the review by no later than October 2019.

REUTERS

A version of this article appeared in the print edition of The Straits Times on October 10, 2016, with the headline 'IMF members pledge to boost trade and spending'. Print Edition | Subscribe