I.M.F. meeting concludes with dire economic outlook and pleas to the U.S.
In a comuniqué from the I.M.F. at the conclusion of it’s twenty-sixth meeting, the International Financial and Monetary Committee (IFMC) said that global growth is slowing and “substantial downside risks remain” while pleading with U.S. leadership to resolve it’s debt crisis sooner, rather than later.
The policy-setting body of the I.M.F., the I.F.M.C, said that while central bank measures so far have made improvements, more is needed “to secure a sustained recovery from the crisis.”
In a direct plea to the United States the committee begged U.S. leadership to resolve fiscal disagreements that might lead to the “fiscal cliff” which would trigger huge budget cuts and tax increases on top of those already going into effect within Obamacare. The current inability of the President to lead Congress in compromise on the budget has garnered international attention and created uncertainty in the global economy.
While Democrats decry candidate Mitt Romney’s framework approach to fiscal reform as “lacking details”, it may well be the only way to end the divisiveness in Washington that has been a feature of the current administration and give the global economy the foundation it needs to recover from years of recession.
The I.F.M.C. noted that emerging economies are suffering due to weak external demand and called on the international community to “provide broader support” for the Arab region.
The committee announced that it has been using windfall profits from gold sales to bolster low-income nations during the recession and expects to continue to be able to do so. A total of $3.8 billion in gold profits is expected to be used to fund poorer countries.
Member nations have pledged large amounts of money to the fund to bolster its finances. More than $461 billion in total borrowing has been offered to the IMF by member nations.
Loans to needy nations are based on a controversial concept called “conditionality.” Receivers are not required to provide collateral against the loan, but instead required to make policy changes to bolster their financial systems or risk having the money withheld. Conditionality may give the I.M.F. power over receiver nations to impact policy in a way that differs from the country’s desired social and economic direction.
The I.M.F. describes itself as “an organization of 188 countries working to foster global monetary cooperation” and is headquarter in Washington, D.C.