Front Matter

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The Managing Director’s Global Policy Agenda

October 2013

Prepared by Staff of the International Monetary Fund

The Managing Director’s Global Policy Agenda

The Managing Director of the International Monetary Fund presented the first semiannual Global Policy Agenda (GPA) to the International Monetary and Financial Committee (IMFC)—the IMF’s policy-guiding body—in October 2012. The GPA identifies the policy challenges faced by the membership, outlines policy responses that are needed at the global and country levels to address these challenges, and lays out what the IMF can do to provide support.

THE MANAGING DIRECTOR'S GLOBAL POLICY AGENDA OCTOBER 2013

Over the past five years much has been done to avoid the worst and stave off a great depression. While the recovery has been disappointing until recently, there are some encouraging signs that activity is strengthening in advanced economies. Breaking the cycle of growth shortfalls and recurring market jitters requires carefully managing multiple transitions that are already underway. These transitions include the normalization of global financial conditions; a shift in global growth dynamics, and a rebalancing of global demand; and the completion of reforms to the international financial system. Much more ambitious reform implementation and policy coherence are needed to address these challenges and avoid five more years of growth disappointments.

The policy priorities for the period ahead vary across countries:

  • Advanced economies—Macroeconomic policies should remain supportive, with gradual fiscal adjustment anchored by credible medium-term plans. The United States needs to raise the debt ceiling and agree on a medium-term fiscal adjustment roadmap, carefully manage the normalization of financial conditions, and strengthen appropriate oversight of shadow banks. The euro area requires more actions to reduce financial fragmentation and address architectural issues of the union, as well as structural reforms to revive growth. In Japan, reform success hinges on ambitious fiscal medium-term adjustment and measures to invigorate growth.

  • Emerging market economies—Policy responses to recent financial turbulence should be anchored by sound and credible monetary policy frameworks. Exchange rates should be allowed to respond to changes in fundamentals, with buffers used to avoid excessive and disorderly adjustment. Gradual fiscal consolidation should continue in countries with high deficits and debt. Removing structural obstacles—including infrastructure deficits and entry barriers in markets—will be critical to support high growth going forward.

  • Low-income countries—While growth has remained resilient in most countries, global downside risks point to the need for proactive macroeconomic policies. Bolstering foreign reserves and maintaining domestic fiscal space are priorities. Action on many fronts is needed to promote inclusive growth.

  • Globally— Addressing remaining external imbalances requires further progress in closing policy gaps in major economies. Pending regulatory reforms must be completed to ensure that the global financial system will transition to a safer state.

The Fund will help its members move forward. We provide a unique forum for multilateral policy analysis, dialogue and cooperation, including on policy spillovers, global imbalances, and the policy mix, and offer targeted policy advice and capacity building. Moreover, the Fund has an expanded capacity to offer financial support through various facilities. However, to maintain our financial strength and credibility, swift progress on governance and quota reforms is key.

Managing Director’s Global Policy Agenda to the International Monetary and Financial Committee
Author: International Monetary Fund