IMF’s Lagarde urges action to deliver on G20’s Hangzhou commitments

Sept 06, 2016 (LBO) – Christine Lagarde, Managing Director of the International Monetary Fund (IMF), called on the leadership of the Group of 20 (G20) to implement plans for economic growth through monetary, fiscal and structural adjustments, and for the wider sharing of this growth, after Summit in Hangzhou, China.

“I would like to warmly congratulate President Xi and the Chinese authorities on their leadership of the G20 this year and their excellent organization of the Leaders Summit meeting in the beautiful city of Hangzhou.

“We met against the backdrop of a global landscape characterized by major economic and technological shifts, and by growth that has been too low for too long–and which has benefited too few. Through the Hangzhou Action Plan, the G20 leaders expressed their determination to address these challenges with a set of forceful policy actions.

“A first priority is a coordinated effort to raise growth. The G20 agreed that this will require making full use of all policy levers–monetary, fiscal, and structural–individually and collectively. The G20 also agreed to identify and prioritize reforms that provide the biggest growth impulse for each country, which is an area where the IMF is actively engaged. Pushing back against protectionism and pushing forward with free and fair trade is a vital component of this growth agenda.

“A second priority is a commitment that growth must be more widely shared. Again, countries should deploy proven tools to reduce excessive inequality and raise economic prospects, particularly for low-income groups and workers affected by rapid technological change–for example, through skills training and investments in education and health. We need increased growth, but it must be better balanced, more sustainable, and inclusive so as to benefit all people.

“The G20 endorsed several initiatives underway to support the stability and resilience of the international financial architecture. This included support for further strengthening of the global financial safety net, with an adequately financed IMF at its center and equipped with a more effective toolkit. This would also involve even greater cooperation between the IMF and regional financing arrangements, such as the Chiang Mai Initiative.

“Regarding IMF resources, I am heartened that the G20 leaders supported maintaining access to bilateral and multilateral borrowing arrangements, in line with the objective of preserving the IMF’s current lending capacity. I especially appreciated the G20’s call for broad participation of the IMF membership in this effort, including through new agreements. And I am pleased that some countries have already indicated their willingness to make commitments. This should help provide confidence that the IMF will continue to have the capacity to address the needs of its membership.

“G20 leaders welcomed the entry-into-effect of the IMF’s 14th review of quota reforms–which represent a major step toward reflecting the increasing role of dynamic emerging market countries in the Fund’s governance–and working towards completion of the 15th review by the 2017 Annual Meetings. The G20 also welcomed the inclusion of the Renminbi into the SDR (Special Drawing Right) currency basket as of October 1st–an important milestone that will help strengthen the international monetary system as well as China’s role in the global economy. More generally, the G20 supported the ongoing exploration of broader use of the SDR.

“Finally, I would again like to thank our Chinese hosts for their truly wonderful hospitality. The IMF looks forward to working closely with the German Presidency of the G20 in 2017. “