By Obinna Chima
The International Monetary Fund (IMF)
has stressed the importance of a timely and consistent implementation of
the financial sector reform agenda as soon as possible to further
strengthen financial sector resilience across the world.
The Fund also said there was need
to continue to monitor and, if necessary, address emerging risks and
vulnerabilities in the financial system. According to the IMF, countries
should also pursue policies that would enhance inclusion to widely
share the gains from technology and economic integration and manage
associated risks.
This formed part of the communiqué at the end of the 37thMeeting of the International Monetary and Financial Committeein Washington DC.
The committee noted that global growth
had further strengthened and was increasingly broad-based, driven by a
strong rebound in investment and trade.
It stated that risks were broadly
balanced in the near term, but remained skewed to the downside beyond
the next several quarters.
“Rising financial vulnerabilities,
increasing trade and geopolitical tensions, and historically high global
debt threaten global growth prospects. Demographic headwinds and
subdued productivity growth may reduce the potential for higher and more
inclusive growth going forward.
“The window of opportunity remains open
and should be used expeditiously to advance policies and reforms that
sustain the current upswing, enhance resilience, and raise medium-term
growth for the benefit of all.
“We will continue to use all policy tools to achieve strong, sustainable, balanced, inclusive, and job-rich growth.
“In line with central bank mandates and
mindful of financial stability risks, monetary accommodation should
continue where inflation remains weak and be gradually withdrawn where
inflation looks set to return to central bank targets,” the committee
said.
Furthermore, it urged policy makers in
member countries to ensure that fiscal policies are flexible and
growth-friendly as well as to rebuild buffers where needed.
The committee also advised
against procyclicality, saying countries must create space to invest in
infrastructure and workforce skills, and ensure that public debt as a
share of Gross Domestic Product was on a sustainable path.
“Structural reforms should aim to lift
productivity, potential growth, and employment, while effectively
assisting those bearing the cost of adjustment. “Strong fundamentals,
sound policies, and a resilient international monetary system (IMS) are
essential to the stability of exchange rates, contributing to strong and
sustainable growth and investment.
“Flexible exchange rates, where
feasible, can serve as a shock absorber. We recognise that excessive
volatility or disorderly movements in exchange rates can have adverse
implications for economic and financial stability.
“We will refrain from competitive
devaluations and will not target our exchange rates for competitive
purposes. We will cooperate to tackle shared challenges.
“We reaffirm the importance of
implementing the conclusions of the G-20 Hamburg Summit on trade and
recognise the need for further dialogue and actions.
“We are working to strengthen the
contribution of trade to our economies. We will continue to work for a
globally fair and modern international tax system, address tax and
competition challenges, including from digitalisation, as appropriate;
and tackle the sources and channels of money laundering and terrorism
financing, proliferation financing, corruption, and other illicit
finance,” it added.
The committee supported efforts toward
reaching the 2030 Sustainable Development Goals (SDGs), saying it
would work towards enhancing debt transparency and sustainable financing
practices by both debtors and creditors and addressing debt
vulnerabilities in low-income countries (LICs).
“We will support countries dealing with
the macroeconomic consequences of pandemics, cyber risks, climate change
and natural disasters, energy scarcity, conflicts, migration, and
refugee and other humanitarian crises.
“We urge the IMF to work closely with
members to strengthen fiscal frameworks and improve debt management
capacity, and to work with debtors and creditors on promoting
sustainable lending practices and tackling data gaps,” it added.
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