IMF, G-20 and the global crisis

World Faces Crisis Crossroads at G-20 Summit, Says IMF
http://www.imf.org/external/pubs/ft/survey/so/2009/POL032709A.htm

Leaders of the Group of Twenty (G-20) advanced and emerging market economies gathering at a summit in London next week face a crossroads in the global economic crisis, with the opportunity to spur a recovery next year if they take the right action, IMF Managing Director Dominique Strauss-Kahn said.
In a video conference with journalists based in London, Paris, and Washington, Strauss-Kahn outlined five key subjects on which the IMF wanted to see progress at the summit to combat the worst economic downturn in 60 years, in addition to considering how to improve regulation of the fractured global financial system.

• Cleanup of the financial sector. Strauss-Kahn said cleaning up the balance sheets of banks and getting the financial sector working again was critical to reviving world growth. “Countries can do it in different ways, but they have to do it and do it now.”

• Ensuring fiscal stimulus is available for next year. Strauss-Kahn said that governments around the world had done very well in announcing stimulus plans to counter the downturn and create jobs. But they now needed to ensure that efforts were sustained in 2010.

• Helping emerging markets hit by the crisis. Although the crisis did not start with emerging markets, the collapse of trade finance and the drying up of capital flows is hurting many emerging markets. The IMF needs enough resources to assist emerging markets, otherwise a collapse in emerging economies would have a devastating impact on developed economies, reinforcing the crisis.

• Aiding low-income countries. Some of the world’s poorest countries are being affected by the slowdown in world growth, with exports “falling off a cliff” and the prices of commodities and flows of aid falling. Strauss-Kahn said he wanted to ensure a doubling of IMF concessional lending to low-income countries to safeguard them during the crisis.

• Boosting IMF resources. The IMF hopes to at least double its lendable resources to more than $500 billion so that it is ready to help out and provide confidence that economies will have access to funds during the crisis. Japan has provided $100 billion in extra money and the European Union has committed EUR 75 billion.

Download PDF. IMF Note on Global Economic Policies and Prospects — Executive Summary
March 19, 2009. http://www.imf.org/external/np/g20/pdf/031909a.pdf
Global economic activity is falling—with advanced economies registering their sharpest declines in the post-war era—notwithstanding forceful policy efforts.
According to the latest IMF forecast, global activity is expected to decline by around ½ to 1 percent in 2009 on an annual average basis, before recovering gradually in the course of 2010.
Turning around global growth will depend critically on more concerted policy actions to stabilize financial conditions as well as sustained strong policy support to bolster demand.