The International Monetary Fund’s member countries on Saturday pledged to revive flagging global trade, boost government spending and remove barriers to business to fight weak growth that has left too many people behind.
The pledge came as world finance leaders fretted over a rising populist backlash against trade and globalization at the IMF and World Bank annual meetings in Washington.
“The persistently low growth has exposed underlying structural weaknesses and risks further dampening potential growth and prospects for inclusiveness,” the Fund’s steering committee said in a communique.
Britain’s vote in June to leave the European Union, U.S. Republican presidential candidate Donald Trump’s anti-trade rhetoric and a global slowdown in trade volumes have prompted policymakers to try do a better job selling the benefits of global economic integration to the general public.
The International Monetary and Financial Committee said uncertainty and downside risks to the global recovery were elevated, and that it was increasingly threatened by protectionist policies and stalled reforms.
“We reinforce our commitment to strong, sustainable, inclusive, job-rich and more balanced growth. We will use all policy tools – structural reforms, fiscal and monetary policies – both individually and collectively,” it said.
The steering committee, made up of people who represent the fund’s 189 member countries, also included a pledge to “design and implement policies to address the concerns of those who have been left behind and to ensure that everyone has the opportunity to benefit from globalization and technological change.”
IMF Managing Director Christine Lagarde has been urging countries to do more to boost growth, spending more on infrastructure and education where possible and relying less on loose monetary policy that is already reached the limits of its influence. She also has sought more pro-market reforms in many countries
“We certainly decided to come up more loudly on this occasion to say, ‘central bankers cannot be the only game in town,'” Lagarde told a news conference. “Let’s get on with it and see some action on the part of the other authorities as well.”
The members repeated their pledge to refrain from competitive currency devaluations, to not target exchange rates for competitive purposes and to clearly communicate their policy stances.
“We will also redouble our commitment to maintain economic openness and reinvigorate global trade as a critical means to boost global growth.”
In addition, the IMF panel said it would “intensify” efforts to deal with bad loans and other financial sector problems left over from the last financial crisis in some advanced countries. The pledge comes as questions over Deutsche Bank’s financial health also prompted considerable discussion around the talks.
The IMF statement said that 26 member countries had pledged $360 billion in bilateral financing that can be used to supplement the Fund’s normal lending resources.
The members agreed with Lagarde’s proposal to delay the next review of the Fund’s “quota” shareholding system by about two years. They pledged to complete the review by no later than October 2019, compared with an original timetable for completion in 2017.
The last quota review, completed in 2010 but only ratified by the U.S. Congress in late 2015, resulted in a greater share for China, Brazil and other major emerging market economies.