IMF chief Christine Lagarde today called for urgent action to strengthen global growth and build inclusive economies while benefitting from the ongoing recovery process by addressing potential risks and keeping away from complacency. At the end of G20 Summit, she said the good news is that the global economic recovery is on track, broad-based, and expected to continue into next year. “At the same time, I warned about complacency and risks, including elevated financial vulnerabilities, low productivity, and rising inequality,” she said. The current period of growth should be used as an opportunity to further safeguard the financial sector — by building up capital buffers as well as by strengthening corporate and bank balance sheets, she added. Further, Lagarde said the issue of stagnant real wages — which can undermine the recovery and fuel discontent — should be addressed and there is need to confront the problem of excessive current account imbalances. Listing out five priorities, Lagarde said there is need to step up trade reforms by reducing arrows and subsidies and by promoting competition to create level playing field.
She suggested increasing productive infrastructure investment, promoting financial inclusion especially for women, investing in human capital and accelerating labour market reforms. “I strongly welcome the G20’s focus on climate change, the sustainable development goals, and the challenges facing low- income countries. “I commend, in particular, Germany’s leadership in launching the Compact with Africa, which is designed to boost private investment across the continent. “The countries involved in the first wave of this effort are already receiving support from the IMF to help strengthen their macroeconomic frameworks and institutions, including by increasing support for capacity development,” she said.
Noting that the Hamburg Action Plan includes an emphasis on strengthening the global financial safety net, with a strong, quota-based, and adequately financed IMF at its centre, she welcomed the G20 leaders’ highlighting the importance of the IMF in continuing to provide capacity development in the area of anti-money laundering and countering the financing of terrorism.
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“My particular thanks go also to the city of Hamburg and especially to the men and women who worked around the clock to ensure public safety and a successful outcome of the meetings, and I wish a speedy recovery to the people that suffered injuries during the protests in recent days,” she said.
Lagarde said just as the global crisis generated the momentum for effective multilateral action, the global economic recovery must be used to continue the collaboration to address risks and ensure strong, sustainable, balanced and inclusive growth.