IMF must be more ‘vocal’ on global economy, US says
“The IMF must intensify analysis of and become more vocal on key issues that impact growth and stability of the global economic system,” US Treasury Secretary Jacob Lew said in a statement, citing currency exchange rates, current account imbalances and demand shortfalls.
“Sometimes this will make the IMF unpopular,” he added. “But vocal advocacy in the name of its core mandate is likely to make the IMF a more effective institution over the long term.”
The remarks came as a week of annual meetings between IMF and the World Bank wound down in Washington.
The United States, which is the IMF’s largest shareholder, said it expected the global crisis lender to do more to prod countries like Germany to spend more of their budget surpluses to spur global growth.
“I urge the IMF to be more vocal in pressing countries with excess capacity to pursue fiscal measures that smooth the transition away from excess production while maintaining demand,” said Lew.
IMF Managing Director Christine Lagarde seemed to have heard the message this week and openly called on Germany to spend more. But Berlin appeared unmoved.
The United States also called on the World Bank, where it is also the largest shareholder, to “better manage” the strain that member states’ growing demands were putting on the development lender’s resources.
“We recognize that global economic headwinds are contributing to strong country demand, straining the World Bank’s available capital,” Lew said in a separate statement.
The World Bank could meet such challenges through “selectivity and greater discipline” to maintain more viable lending levels, Lew said.
On Thursday, World Bank President Jim Yong Kim acknowledged that his institution’s resources had been put to the test by the new missions entrusted to it, particular concerning climate change and the refugee crisis.
“It’s hard to see how we’re going to meet all those demands without a capital increase,” he said.