Managing Director S Statement To The International Monetary And Financial Committee On Financing Sustainable Development Key Policy Issues And The Role Of The Fund

2015 is a pivotal year—a year when the international community will commit to a shared vision on goals for international development through 2030 and beyond. Achieving these Sustainable Development Goals (SDGs) will require a partnership among advanced, emerging, and developing economies, and international institutions to ensure that the required policies are put in place and that sufficient private and public resources are mobilized. The Fund, with its global membership and mandate at both the national and multilateral levels, is uniquely positioned to contribute to this compact and help implement it. As new deliverables, the IMF is considering: 1. Boosting the access to IMF resources provided to developing countries, better positioning them to handle balance of payments needs as they pursue growth; 2. Expanding diagnostic and capacity-building support for countries seeking to scale up investment to tackle infrastructure gaps; 3. Sharpening the focus of operational work on equity, inclusion, and gender, drawing on ongoing analysis and work of other institutions; 4. Increasing the focus on and resourcing of work on fragile/conflict-affected states; 5. Selective expansion of capacity-building efforts in the areas Full text is also available in French and Spanish.

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This Work Program translates the strategic directions and policy priorities laid out in the Spring 2019 Global Policy Agenda and the International Monetary and Financial Committee Communiqué into an Executive Board agenda for the next twelve months. Its main policy priorities and related deliverables are as follows: • Support domestic policies to enhance resilience and inclusion: • Upgrade global cooperation to level the playing field and address other shared challenges • Adapt the Fund’s toolkits to lead and support change: • Continue to modernize the Fund to deliver for the future:

The recovery is solidifying. However, old policy challenges still need to be fully addressed and new challenges are arising, especially on account of rising commodities prices. In many advanced economies the handoff from public to private demand is proceeding. But unemployment remains high and weak public balance sheets and still vulnerable financial sectors mean that the recovery is subject to downside risks. In many emerging market economies, overheating and financial imbalances present growing policy concerns. Monetary policy should stay accommodative in advanced economies, but needs further tightening in a number of emerging and developing economies to rein in inflationary pressure and rapid credit growth. Additionally, in emerging surplus economies, real exchange rate appreciation is needed to help contain inflation and support global demand rebalancing. In most economies, the time has come to begin fiscal adjustment by implementing measures to steadily reduce debt ratios toward more prudent levels. Moreover, financial sector repair and reform need to accelerate. Absent major progress on all these fronts, the recovery will remain vulnerable and job creation will continue to fall short of requirements in many parts of the world.

While growth in advanced economies is losing momentum amid trade tensions and policy uncertainty, activity in many emerging and low-income developing countries (EMDEs) has remained more robust, supported by still favorable financing conditions. Differences across EMDEs are large, however, and downside risks are building. Policy priorities include enhancing resilience in response to a more challenging global environment, creating fiscal space for essential development spending, containing debt vulnerabilities, and promoting strong and inclusive growth. Strengthening revenue generating capacity, enhancing public spending efficiency, and addressing infrastructure gaps are critical for reaching the 2030 Sustainable Development Goals.

Since the IMFC last met, the global economic recovery has gathered strength and financial conditions have kept improving; but members continue to face multiple and diverse challenges—slow growth, high unemployment, and fiscal and financial vulnerabilities in many advanced economies; and rapid credit growth and overheating pressures in some emerging markets. Rising food and energy prices have returned, further constraining policies. Meanwhile, global imbalances show no sign of abating, and volatility in cross border financial flows and exchange rates remains high. The outlook has been further challenged recently by unpredictable shocks: the tragic events in Japan and developments across the Middle East and North Africa. The latter also contain an important lesson for policy makers, namely that the quality of growth—especially its ability to combat unacceptably high unemployment and inequality—is critical to the sustainability of growth.

As described in the latest Consolidated Multilateral Surveillance Report, policy actions in Europe and improving U.S. indicators have helped attenuate financial strains. But recent developments point to the fragility of the world economy and the need to come to grips with a formidable policy agenda. Among the challenges ahead are the immediate risks from a return of stresses in Europe and higher oil prices. Beyond that lie the risks from protracted low growth, too rapid fiscal consolidation in certain cases, deleveraging and uncertain medium-term policy frameworks in some key advanced countries. Many emerging markets may have to deal with inflation risks, elevated oil prices, the resurgence and volatility in capital inflows, and the consequences of extended credit booms. Delays in implementing global regulatory reforms also pose risks.

This paper describes the policy changes that the Fund has made since the October 2007 IMFC meeting and the ways in which we plan to refocus the Fund’s work to support our members more strongly. It also describes the steps that management, staff, and the Executive Board have agreed to put our own house in order—to reform our governance, contain our spending, and solve our income problem.