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International Monetary Fund

Abstract

As FY2010 drew to a close,1 the global economy appeared to be emerging from the worst recession in over 60 years. The recovery remained uneven, however, with some economies growing very robustly, while others were experiencing more tepid rebounds, and downside risks were increasing-and continued to do so in early FY2011. Policies are needed to address these risks and set the stage for a return to strong and sustained global growth.

International Monetary Fund

Abstract

The past year has been a roller coaster for the global economy.4 The severe financial crisis that followed the collapse of Lehman Brothers in September 2008 had a significant negative effect on the world economy, with global output falling by ½ percent in 2009. Advanced economies were the most significantly affected by the financial crisis, having to deal with a serious credit crunch, battered balance sheets, and rising unemployment. In these countries, output fell by 3¼ percent in 2009. The crisis was transmitted swiftly across the globe through a number of channels-including a collapse in trade, a drying up of capital flows, and a drop in remittances. When the dust had settled, it became obvious that several emerging markets and low-income countries had been severely affected by the global crisis, the worst in over 60 years.

International Monetary Fund

Abstract

The global economy went through a period of unprecedented financial instability in 2008-09, accompanied by the worst global economic downturn and collapse in trade in many decades. The IMF played a leading role in helping its member countries deal with the immediate challenges posed by the crisis and begin to shape a new, stronger global financial system.

International Monetary Fund

Abstract

At the October 2009 Annual Meetings, the IMFC endorsed the following broad priorities for the IMF for the period ahead: (1) reassessing the institution’s mandate to encompass the full range of macroeconomic and financial sector policies that bear on global stability; (2) continuing to strengthen its financing capacity, to help members cope with balance of payments problems, including financial volatility, and reduce the perceived need for excessive reserve accumulation; (3) sharpening multilateral surveillance and better integrating it into bilateral surveillance, and undertaking further strengthening of cross-country, regional, and multilateral surveillance; and (4) reforming Fund governance, to increase the institution’s legitimacy and effectiveness.

International Monetary Fund

Abstract

In FY2010, the IMF continued the implementation of internal reforms approved in 2008. Work progressed on restructuring the income and expenditure sides of the IMF accounts. Sales of IMF gold envisioned in the 2008 reforms, with the intention of enabling a move to a new income model for the Fund and supplementing its resources for concessional lending, were approved by the Board and began. On the expenditure side, further progress was made in aligning the Fund’s medium-term budget with revised objectives involving permanent reductions in expenditures and numbers of staff.

International Monetary Fund

Abstract

The global economy faced a number of challenges during FY2008. As problems in the U.S. subprime mortgage market spilled over into other credit markets, growth prospects slowed in a number of the advanced economies; at the same time, prices for food and oil surged, adding to inflationary pressures worldwide and creating severe hardships for many low-income countries.1 The IMF’s Executive Board—in accordance with the Fund’s core mandate of safeguarding global macroeconomic and financial stability—responded to these developments immediately, strengthening the Fund’s analysis of financial sector issues, recommending policies that could help member countries mitigate the impact of turmoil in financial markets on their economies, and offering policy advice to low-income countries on macroeconomic management in the face of rising costs for food and fuel as well as financial assistance to members in this group experiencing balance of payments problems triggered by the higher cost of imports.2 FY2008 was also a year of reform in the IMF, as the Executive Board moved ahead with measures that will enable the IMF to better meet the evolving needs of its member countries, keep pace with changes in the global economy and financial markets, and adjust to a reduced budgetary envelope.

International Monetary Fund

Abstract

The course of the global economy in FY2008 was shaped by the interaction of three powerful forces: an escalating financial crisis slowed growth in some of the advanced economies, growth in emerging market and developing economies continued at a brisk pace, and inflationary pressures intensified throughout the world, fueled in part by soaring commodity prices. Overall, global GDP measured at purchasing power parity exchange rates increased by 4.9 percent in 2007—well above trend for the fourth consecutive year (Figure 2.1). From the fourth quarter, however, activity decelerated in the advanced economies, particularly in the United States, where the crisis in the subprime mortgage market affected a broad range of financial markets and institutions. Although growth in emerging market and developing economies also slowed beginning in the fourth quarter of 2007, it remained robust, by historical standards, across all regions.

International Monetary Fund

Abstract

Surveillance is at the core of the IMF’s mandate. The IMF is responsible, under its Articles of Agreement, for overseeing the international monetary system to identify any vulnerabilities that could undermine its stability. It fulfills this responsibility in part by monitoring the macroeconomic policies of its 185 member countries and providing analysis and policy advice tailored to each member’s specific circumstances (referred to as bilateral surveillance) and monitoring economic conditions and developments in international capital markets and assessing the global effects of major economic and financial developments, such as oil market conditions or external imbalances (multilateral surveillance). These activities are supplemented by the Fund’s surveillance of regional institutions that conduct monetary and economic policy for groups of countries bound together in formal arrangements, such as currency unions (regional surveillance; see Box 3.1). As financial markets experienced exceptional turbulence, growth slowed dramatically in some of the advanced economies, and world prices for food and oil soared during FY2008, the IMF’s Executive Board intensified its efforts to further strengthen and modernize the Fund’s surveillance activities.15

International Monetary Fund

Abstract

The IMF provides support to its member countries through a variety of instruments, depending on their needs. It has a number of different lending facilities (Table 4.1) as well as mechanisms for providing policy support without financing, and also provides, at the request of members, technical assistance and training that are consistent with the purposes of the Fund. The IMF’s Executive Board regularly reviews these instruments to ensure that they continue to meet the evolving needs of member countries. Consideration and approval of members’ requests for financial assistance and program support are core Board responsibilities, alongside surveillance. Under its lending facilities, the IMF makes temporary financing available to give member countries time to adjust their policies so as to overcome short-term balance of payments problems, such as insufficient foreign exchange to purchase needed imports or make payments on external obligations; stabilize their economies; and avoid similar problems in the future. IMF financing is provided in support of economic reform programs developed by member countries themselves in collaboration with the IMF, and is expected to have a catalytic effect, enabling a country to restore confidence in its policies and attract additional financing from other sources. The Board regularly evaluates members’ performance under their programs, and, in most cases, funds are disbursed as program targets are met.

International Monetary Fund

Abstract

The financial year that ended on April 30, 2008, was a pivotal one of reform and change in the governance, organization, and finances of the Fund.