IMF calls for credible actions to address global challenges

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International Monetary Fund (IMF) Governors attend the International Monetary and Financial Committee (IMFC) Meeting during the 2011 International Monetary Fund (IMF) and World Bank spring meetings in Washington D.C., capital of the United States, April 16, 2011. [Xinhua]

The global recovery remains vulnerable, and countries need to take credible actions to address various challenges, the International Monetary Fund (IMF) main policy committee said on Saturday.

"The global recovery is gaining strength but remains vulnerable, " the International Monetary and Financial Committee (IMFC) said in a communique after concluding its 23rd meeting in Washington.

"Credible actions are needed to accelerate progress in addressing challenges to financial stability and sovereign debt sustainability, and to ensure timely fiscal consolidation in advanced economies, whilst taking steps to avoid overheating in emerging market countries, and dealing with risks from higher commodity prices," said the communique.

Participants of the ongoing IMF and World Bank spring meetings recognized that the global recovery has been characterized as multi-speed recovery, with the advanced economies remaining sluggish while emerging markets mostly robust. As a result, advanced economies and emerging markets are facing different challenges and have diversified policy priorities.

During the meetings, the 187-member financial organization had intensive discussions on how to promote global financial stability and avoid another financial crisis from occurring.

"Significant vulnerabilities still exist in the global financial system," Tharman Shanmugaratnam, the IMFC new chairman and finance minister of Singapore, said at a press conference Saturday.

The fund said it's committed to accelerate efforts to strengthen the resilience of the financial sector and its ability to support economic recovery.

The communiqu said further progress is needed to address excessive financial risk taking and moral hazard, and strengthen supervision and regulation in financial centers. It called for enhanced cooperation to address risks posed by global systemically important financial institutions.

The fund promised to further strengthen its function of surveillance, and continue its work to find a "comprehensive and balanced approach" for the management of capital flows which have become an elevated risk for some emerging markets, according to the communiqu.

The IMF noted that low-income countries remain vulnerable to the recent surge in food and fuel prices, saying that it would continue to provide policy support and financing to help those countries overcome their balance of payments problems.

With respect to governance reform, the communique urged all members to work to make the 2010 quota and governance reform effective by the 2012 annual meetings.

The IMFC, comprising finance ministers and central bank governors, is the primary advisory body of the IMF Board of Governors and deliberates on the principal policy issues facing the IMF.

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