Front Matter Page
INTERNATIONAL MONETARY FUND
Progress Report of the Managing Director to the IMFC on the IMF’s Policy Agenda—IMF Responses to Global Economic Challenges
October 8, 2008
❖Global stability. The deepening financial market crisis has created difficult policy challenges and underlined the need for better analysis of global stability risks. Drawing on its universal membership and crisis-management experience, the Fund is facilitating a global dialogue on responses and looking more systematically at cross- country spillovers. In collaboration with other international bodies, it is distilling and promoting lessons from the current financial crisis. Steps have also been taken to expand early warning capabilities to advanced countries and to implement our new exchange rate surveillance framework more effectively.
❖Fund lending. Given recent low demand for Fund facilities, we are taking a fresh look at our lending role. While this decline owes much to higher private capital flows and strengthened policy frameworks, it may also reflect a need to adapt our lending modalities. A comprehensive review will help ensure that members can continue to rely on Fund financing to “give confidence” to them and thereby help lessen the costs of necessary adjustments.
❖Food and fuel price developments. The immediate priority is to contain risks to macroeconomic stability, poverty reduction, and food security. To that end, the Fund has provided targeted policy advice (e.g., in favor of expanded social safety nets, but against universal subsidies and export taxes) and additional financial assistance. Policy changes will allow more flexible provision of such assistance very soon.
❖Modernizing the Fund. With the Fund leaner and refocused, efforts now turn to implementing modernization. Acceptance of an amendment of the Articles and a decision on gold sales are needed to fully implement the new income model approved in the spring, and in the meantime, work is progressing on essential aspects (e.g., the rate of charge). Budget reforms focus on better costing of activities and aligning business plans with the Fund’s strategy. Newly created units will guide work on the Fund’s strategic directions, macro-financial linkages, and low-income countries. A joint steering committee of Executive Directors and Fund Management as well as a committee of eminent persons are assessing the Fund’s governance structure, including the respective roles of its various decision-making bodies and Fund Management.