| ABC News | - |
That
pledge from the International Monetary Fund's policy-setting committee
comes after a week of stomach-churning swings in the financial markets triggered by growing fears that parts of Europe could be in danger of slipping into another recession.
Global Finance Leaders Pledge Bold Efforts
World financial leaders on Saturday promised "bold and ambitious" action
to boost a global recovery that has shown recent disturbing signs of
weakness.
That pledge from the International Monetary Fund's policy-setting
committee comes after a week of stomach-churning swings in the financial
markets triggered by growing fears that parts of Europe could be in
danger of slipping into another recession.
The 188-nation IMF called increasing economic growth an "utmost
priority" and pledged to make the necessary structural changes that
would stimulate greater growth. However, finance leaders have made
similar promises in the past, only to fall short when trying to follow
through.
The commitments came in a closing statement from the IMF's steering committee at the fall meeting of the IMF and World Bank.
Officials also endorsed the IMF's efforts to support three West African countries battling the Ebola crisis.
Managing Director Christine Lagarde said at a news conference that the
IMF has made $130 million available to Guinea, Liberia and Sierra Leone,
and that the IMF and other international agencies stood ready to do
more.
"If more is needed, it will be there," Lagarde said.
In addition to the $130 million in interest-free loans being provided by
the IMF, the World Bank is providing $400 million for the Ebola
efforts.
In its closing statement, the World Bank policy committee said that
"swift and coordinated action and financial support are critical to
contain" the Ebola crisis.
World Bank President Jim Kim said that a Thursday meeting sponsored by
the bank to highlight the funding needs was useful, but he stressed that
the situation remained critical. "We call on all countries that are
watching. If you have any sense that you want to help with this
epidemic, do it now," Kim told reporters at a closing news conference.
International relief agencies stressed that time was critical.
"The speed and amount of governments' pledges will make the difference
between Ebola containment or pandemic," said Nicolas Mombrial, an
official with Oxfam.
The IMF and World Bank meetings were preceded by talks among finance
ministers and central bank presidents of the Group of 20 nations, which
comprise 85 percent of the global economy. Those discussions focused on
the recent growth slowdown and troubling signs that some countries in
Europe could be close to another recession.
In a comment clearly aimed at Germany, Treasury Secretary Jacob Lew told
finance ministers that European countries with "external surpluses and
fiscal flexibility" needed to do more to address weakness in demand that
was holding back growth.
Germany, Europe's largest economy, ran a large trade surplus last year.
Lew also called on China, now the world's second-largest economy, and
Japan, No. 3, to make the necessary policy adjustments to increase their
own growth.
A string of weak reports on economic activity in Germany, the largest
economy in Europe, jolted financial markets this past week.
U.S. stocks ended their worst week since May 2012, and the market turbulence served as a backdrop for the finance meetings.
While Germany came under pressure at the meetings to move to support
greater government spending to boost growth, German Finance Minister
Wolfgang Schaeuble insisted in his remarks to the IMF that German
Chancellor Angela Merkel's government still believed the emphasis needed
to remain on reducing deficits.
He said that this effort "will make the economy more robust and shock
resistant and thus contribute to improved global financial stability,."
Singapore Finance Minister Tharman Shanmugaratnam, who is the chairman
of the IMF policy committee, said that the finance officials had spent a
great amount of time discussing the need to move more quickly to adopt
structural reforms in such areas as entitlement spending, labor markets
and taxes to boost growth and avert a prolonged period of weak growth.
"It will require some political courage and some degree of realism on
the part of national legislatures, but it can be done," he said.
The finance officials also stressed the importance of the Federal
Reserve and other central banks to communicate clearly their intentions
so that emerging market economies have time to prepare their own
economies and avert the shocks that were felt last year when the Fed
first announced that it was thinking of starting to reduce it monthly
bond purchases.
Fed Vice Chairman Stanley Fischer, delivering a speech at an IMF lecture
series on Saturday, said, "We have done everything we can, within the
limits of forecast uncertainty, to prepare market participants to what
lies ahead."
In response to an audience question about the timing of the Fed's first
interest rate hike, Fischer said, "If the world is growing much faster,
it (interest rates) will lift off sooner and if the world is growing
more slowly, then quite likely the lift-off will be later."
The widespread view is that the Fed's first increase in its benchmark
short-term rate will occur around June of next year. This rate has been
at a record low near zero since December 2008.
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