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Finance Officials Push for Bold Action to Sustain Economic Growth Finance Officials Push for Bold Action to Sustain Economic Growth
(5 months later)
WASHINGTON — At the World Bank and International Monetary Fund annual spring meetings, concerns about crisis have given way to concerns about complacency. WASHINGTON — At the World Bank and International Monetary Fund annual spring meetings, concerns about crisis have given way to concerns about complacency.
The euro zone has re-emerged from recession. Emerging-market jitters have quieted. The fiscal battles in the United States have abated. But the recovery remains fragile and in many cases, growth remains sluggish, leaving a jobs gap of 62 million.The euro zone has re-emerged from recession. Emerging-market jitters have quieted. The fiscal battles in the United States have abated. But the recovery remains fragile and in many cases, growth remains sluggish, leaving a jobs gap of 62 million.
“The overriding topic for discussion will be the topic of growth, quest for higher growth, better quality growth, more inclusive growth and sustainable growth,” said Christine Lagarde, the managing director of the fund, speaking with reporters on the eve of the weekend conference. “We need to act now.”“The overriding topic for discussion will be the topic of growth, quest for higher growth, better quality growth, more inclusive growth and sustainable growth,” said Christine Lagarde, the managing director of the fund, speaking with reporters on the eve of the weekend conference. “We need to act now.”
Underlying the discussions of inflation, interest rates, fiscal balance and trade policy among the assembled ministers were concerns about Ukraine, as news of pro-Russian activists seizing official buildings in the eastern part of the former Soviet republic sent jitters through the meetings. Officials said they hoped that the situation would not escalate. But if it did, it might pose serious consequences to Europe’s fragile recovery.Underlying the discussions of inflation, interest rates, fiscal balance and trade policy among the assembled ministers were concerns about Ukraine, as news of pro-Russian activists seizing official buildings in the eastern part of the former Soviet republic sent jitters through the meetings. Officials said they hoped that the situation would not escalate. But if it did, it might pose serious consequences to Europe’s fragile recovery.
“We are monitoring the economic situation in Ukraine, mindful of any risks to economic and financial stability, and welcome the I.M.F.’s recent engagement with Ukraine,” said a communiqué from the Group of 20, which consists of the world’s biggest economies.“We are monitoring the economic situation in Ukraine, mindful of any risks to economic and financial stability, and welcome the I.M.F.’s recent engagement with Ukraine,” said a communiqué from the Group of 20, which consists of the world’s biggest economies.
The fund is preparing a financial rescue package for Kiev that would come with stringent conditions, including tax increases and cuts in government spending. The package would be worth $14 billion to $18 billion, Ms. Lagarde said. The World Bank, the fund’s sister organization, is also offering Ukraine billions in aid, with individual countries preparing bilateral packages, as well.The fund is preparing a financial rescue package for Kiev that would come with stringent conditions, including tax increases and cuts in government spending. The package would be worth $14 billion to $18 billion, Ms. Lagarde said. The World Bank, the fund’s sister organization, is also offering Ukraine billions in aid, with individual countries preparing bilateral packages, as well.
Finance ministers and central bankers also discussed the possibility of new penalties for Russia, said Jacob J. Lew, the Treasury secretary. “There is broad and strong unity within the G-7 on increasing the sanctions and costs in response to escalating action from Russia,” he said, referring to the Group of 7, meaning Britain, Canada, France, Germany, Italy, Japan and the United States. “There was no dissent in the room that it was essential that there be unity in taking action if necessary.”Finance ministers and central bankers also discussed the possibility of new penalties for Russia, said Jacob J. Lew, the Treasury secretary. “There is broad and strong unity within the G-7 on increasing the sanctions and costs in response to escalating action from Russia,” he said, referring to the Group of 7, meaning Britain, Canada, France, Germany, Italy, Japan and the United States. “There was no dissent in the room that it was essential that there be unity in taking action if necessary.”
On Monday, Mr. Lew plans to sign a declaration “moving forward” $1 billion in loan guarantees for Ukraine.On Monday, Mr. Lew plans to sign a declaration “moving forward” $1 billion in loan guarantees for Ukraine.
At the meetings, the United States also took heated criticism for Congress’s failure to agree to a 2010 reform package that would give emerging-market countries more say within the fund. The Obama administration has repeatedly urged leaders on Capitol Hill to ratify the package, which requires no new money from the United States, to no avail. “The end of the year for me is the final limit,” said Guido Mantega, Brazil’s finance minister, according to Reuters. “Four years waiting for me is just too much.”At the meetings, the United States also took heated criticism for Congress’s failure to agree to a 2010 reform package that would give emerging-market countries more say within the fund. The Obama administration has repeatedly urged leaders on Capitol Hill to ratify the package, which requires no new money from the United States, to no avail. “The end of the year for me is the final limit,” said Guido Mantega, Brazil’s finance minister, according to Reuters. “Four years waiting for me is just too much.”
The Group of 20 gave a year-end deadline for Congress to act — saying that at that point, the monetary fund might move on without the United States’ assent. It gave no further details. “If the 2010 reforms are not ratified by year-end, we will call on the I.M.F. to build on its existing work and develop options for next steps,” a communiqué said.The Group of 20 gave a year-end deadline for Congress to act — saying that at that point, the monetary fund might move on without the United States’ assent. It gave no further details. “If the 2010 reforms are not ratified by year-end, we will call on the I.M.F. to build on its existing work and develop options for next steps,” a communiqué said.
Much of the rest of the talks focused on creating jobs and strengthening growth now that the world has made its way out of crisis. “Short-term risks to the global economy have eased,” said Dr. Jim Yong Kim, the president of the World Bank. “Increasingly, our worries are focused on the medium term. Our concern is that the pace of reform could be slowing in this postcrisis period. The focus must return urgently to the structural reform agenda. Even a small setback can result in leaving millions of families in destitution rather than escaping poverty.”Much of the rest of the talks focused on creating jobs and strengthening growth now that the world has made its way out of crisis. “Short-term risks to the global economy have eased,” said Dr. Jim Yong Kim, the president of the World Bank. “Increasingly, our worries are focused on the medium term. Our concern is that the pace of reform could be slowing in this postcrisis period. The focus must return urgently to the structural reform agenda. Even a small setback can result in leaving millions of families in destitution rather than escaping poverty.”
With that, the conversation among the world’s finance ministers and central bankers generally atomized into individual prescriptions for individual countries.With that, the conversation among the world’s finance ministers and central bankers generally atomized into individual prescriptions for individual countries.
Growth has picked up in many rich countries, especially in the United States, and Europe has started growing again, too. But the Continent seems to have settled into a period of low inflation and low growth, with widespread concern that the will to make the major economic changes necessary for a stronger recovery might have faded along with the crisis.Growth has picked up in many rich countries, especially in the United States, and Europe has started growing again, too. But the Continent seems to have settled into a period of low inflation and low growth, with widespread concern that the will to make the major economic changes necessary for a stronger recovery might have faded along with the crisis.
“We remain concerned by inflation rates consistently below target and weak demand,” Mr. Lew said. “More needs to be done to support growth and guard against further disinflation in the euro area.”“We remain concerned by inflation rates consistently below target and weak demand,” Mr. Lew said. “More needs to be done to support growth and guard against further disinflation in the euro area.”
The effect of Japan’s major stimulus package — called “Abenomics,” after Prime Minister Shinzo Abe — might also be waning. The I.M.F. cut its estimates of the country’s growth shortly before the meetings. It has urged Tokyo to make structural reforms to bolster its labor market, by, for instance, bringing women into the work force.The effect of Japan’s major stimulus package — called “Abenomics,” after Prime Minister Shinzo Abe — might also be waning. The I.M.F. cut its estimates of the country’s growth shortly before the meetings. It has urged Tokyo to make structural reforms to bolster its labor market, by, for instance, bringing women into the work force.
At a meeting in Sydney at the end of February, members of the Group of 20 major economies — which include rich countries like Canada and developing economies like Brazil and China — agreed to commit to policies to increase growth. The specific target is to lift economic output 2 percent beyond its current trajectory over the coming five years.At a meeting in Sydney at the end of February, members of the Group of 20 major economies — which include rich countries like Canada and developing economies like Brazil and China — agreed to commit to policies to increase growth. The specific target is to lift economic output 2 percent beyond its current trajectory over the coming five years.
Without policies to enhance growth and create jobs, inequality might intensify and tens of millions of workers might remain jobless.Without policies to enhance growth and create jobs, inequality might intensify and tens of millions of workers might remain jobless.
“A massive global jobs gap which opened at the height of the financial crisis continues to widen and will do so in the years ahead unless growth both accelerates and is also job-rich,” said Guy Ryder, the director general of the International Labor Organization. “Creating jobs and narrowing inequalities are essential.”“A massive global jobs gap which opened at the height of the financial crisis continues to widen and will do so in the years ahead unless growth both accelerates and is also job-rich,” said Guy Ryder, the director general of the International Labor Organization. “Creating jobs and narrowing inequalities are essential.”