Gwangju, South Korea: The world economy is recovering moderately but still faces challenges such as the need for medium-term fiscal consolidation, the IMF’s first managing director, John Lipsky, said on Sunday.
“They are mainly confident that there is a moderate recovery underway globally,” he told reporters, referring to delegates at the G-20 meeting of deputy finance and central bank chiefs in South Korea.
“Obviously there are risks and challenges, but things seem to be moving more or less in line with our forecast,” he said, listing well-designed exit strategies and medium-term fiscal consolidation as challenges.
He said some good progress has been made in discussing changes to the IMFs executive board, but did not elaborate. G-20 members have pledged to reach an agreement on the issue by the time leaders meet in Seoul in November.
The United States, frustrated at Europe’s refusal to share more IMF power with emerging economies, took unprecedented action last month to block plans that would have kept Europe’s long-running dominance over the 24-member board.
Emerging economies have called for a bigger say in international institutions such as the IMF in line with their increasing contribution to the global economy and the resultant importance in global economic policy coordination.
A senior Indonesian official told Reuters separately that emerging economies want more voting powers as well as a readjustment in the way the global economic policy is made.
“For emerging markets, the important thing is not only the size of the increase of the quota, but the general idea of the relationship between the quota and governance of the IMF -- and that needs to come in one package,” Hartadi Sarwono, deputy governor of the Indonesian central bank, said in an interview.
One senior official from a member country, who attended the whole of the meetings, told Reuters there was no discussion about specific currencies or currency issues, although issues related to reducing the global imbalances were a key topic.
“Delegates did not talk about any specific currencies or about a specific level of a currency, but of course they discussed global rebalancing,” said the official, who did not want to be identified.
Japan is grappling with the yen’s soaring to 15-year highs against the dollar and policymakers have repeatedly said they could take decisive action on the yen -- normally a code phrase for currency intervention.
South Korea will host the 11-12 November summit of G-20 leaders in Seoul, with key issues also including reforming the global financial regulatory framework and drawing up plans to put the world economy on a balanced and sustainable growth path.