The global economy is expanding moderately but the outlook has weakened further since October, and risks have increased. The global economy has been impaired from growth that has been too slow for too long, and at this rate a sustained recovery—with the expected higher living standards, lower unemployment and declining debt levels—may not be delivered. However, some recent improvement in data releases, somewhat firmer oil prices, reduced pressures on outflows from China, and actions by major central banks have all contributed to improving sentiment. Building on these recent positive developments, the global economy can get back on a stronger and safer track, but the current policy response will need to go further. Countries must reinforce their commitment to durable global growth and employ a more potent policy mix. A three-pronged approach with monetary, fiscal, and structural actions can work as a virtuous trinity, lifting actual and potential growth, averting recession risks, and enhancing financial stability. The IMF will support this commitment by helping countries identify space, craft appropriate policies, and build capacity to deliver on these policies; providing a strong financial backstop for policy implementation; and assisting members with new challenges.
Annex I. Implementation of Policy Priorities by the Membership
Annex II. Key IMF Activities since the Annual Meetings
Over the last six months, the Fund has supported its membership with new AIM by becoming more agile, integrative and member-focused.
The IMF provided financing to countries affected by lower commodity prices and natural disasters. New disbursements under the Rapid Credit Facility were approved for Central African Republic, Dominica, and Madagascar, and a new Standby Credit Facility arrangement for Mozambique.
Knowledge on emerging issues, such as migration, de-risking, and the global trade slowdown, has been
broadened. A number of analytical papers were completed or are underway, including a Staff Discussion Note on the economic implications of the refugee surge in Europe, the extent, scope, and impact of de-risking, and factors behind the global trade slowdown as well as proposals to reinvigorate global trade integration.
Deeper analyses on structural reforms are ongoing, including a WEO chapter highlighting the complementarity between structural reforms and demand-side policies and a toolkit in prioritizing structural reforms.
The adequacy of the global financial safety net and the size of the Fund are being assessed to support a more active and forward-looking dialogue on the ongoing effectiveness of the international monetary system and the IMF, in light of ongoing global economic and financial changes.
The Fund has begun implementing a structured approach for capacity development activities in fragile states tailored to their absorptive capacity with a focus on training and follow-up and results-based monitoring.
Staff took an integrated approach to assessing transition spillovers to member countries, particularly from China rebalancing and low commodity prices.
Work on enhancing focus on macrofinancial and macrostructural issues in surveillance are underway. Macrofinancial pilots commenced in 67 country staff reports. Staff also published a macrostructural report identifying structural reforms areas that are more likely to have macroeconomic implications.
The second phase of the G20 Data Gaps Initiative began in January 2016, with increased focus on risk identification, interconnections, and spillovers.
Efforts to integrate emerging issues into surveillance started. Analyses on climate change, gender, and inequality have been piloted in a few countries where these issues are macro-relevant.
Staff has developed a new tool to monitor disorderly market conditions, which can help inform country teams about domestic market developments and potential widespread stress. Staff has also provided a conceptual approach to assess the appropriateness of unconventional monetary and FX intervention policies, under such conditions.
Synergies between surveillance and capacity development were strengthened, including in the areas of revenue mobilization, GFS standards on reporting, data-gathering, inclusive growth, energy subsidy reform, social safety nets, and Islamic finance. In addition, staff has advanced the training curriculum review to align it better with surveillance.
The Board approved the expansion of the SDR basket to include the renminbi. Staff is working with SDR users and the Chinese authorities to facilitate a smooth transition to the new SDR basket in October 2016.
The 2010 quota and governance reform was implemented, following its acceptance by the membership. The reforms will ensure that the Fund is able to better meet and represent the needs of its members in a rapidly changing environment.
Staff continued to engage with and support various fora, including the G20, ASEAN, and organize peer-to-peer events (CCA, MENA, SSA) as well as high-level seminars (Argentina, Brazil, Canada, Cuba, Ghana, Venezuela) on topics of interest to countries.
The Fund published a paper clarifying the principles of evenhandedness of Fund analysis and advice in surveillance, in response to evidence in the 2014 TSR that it is not evenhanded. The paper also sketches out a possible mechanism for reporting and assessing specific concerns by country authorities.
Technical assistance and training were scaled up in low income countries, particularly in domestic revenue mobilization and international taxation. In addition, staff has reached out to development partners for a significant scaling up of capacity development in support of the Financing for Development agenda.
Online learning further expanded the reach of Fund training. Two new online courses, Financial Programming and Policies Part 2 and Macroeconomic Forecasting, were delivered. The Spanish and Russian versions of the Financial Programming and Policies course were also launched to better serve the needs of members.