Finance ministers and central bank governors from around the world, gathering at the Spring Meetings of the IMF and World Bank in Washington last week, identified a slew of continued and emerging risks to the global economy, including higher food and fuel prices, the disaster in Japan, unrest in the Middle East, lingering unemployment in parts of the world, and the risk of overheating in some dynamic emerging markets.
With the recovery solidifying but still fragile, ministers put the spotlight on how to strengthen the IMF’s surveillance—its economic assessment and analysis—to help countries take the action needed to address risks and avoid future crises.
The new chair of the IMF’s policy-setting body, the International Monetary and Financial Committee, Singapore’s Finance Minister Tharman Shanmugaratnam said that the IMF will need to develop capabilities “to address risks proactively, to anticipate possible scenarios that could turn out to be ugly, and to require that countries, including especially systemically significant countries, take actions early to prevent another major crisis.”
This will require new kinds of analysis. One idea is for a new consolidated report on multilateral surveillance that would include analysis about how economic problems in one part of the world might impact or “spillover” could affect others. According to Managing Director Strauss-Kahn, “we are at Year One of the new multilateral surveillance for the Fund.”
As the meetings were wrapping up in Washington DC, the IMF’s First Deputy Managing Director talked about the outcomes of the meetings. While there are concerns about risks in the global economy, there was important progress on a “multilateral cooperative approach on the various challenges we face.” Watch his interview to hear more about what Mr. Lipsky has to say about progress by the G-20 and about the likely changes to the IMF’s multilateral surveillance.
In an interview during the Spring Meetings, Minister Tharman also spoke about in more detail about the importance of better monitoring risks and spillovers, and his views on IMF governance reforms and being the first IMFC chair from Asia.