On 11 and 12 April, 2014, the IMF's International Monetary and Financial Committee (IMFC) convened its twenty-ninth meeting in Washington, DC and discussed the current situation and risks in the global economy and financial markets, global policy agenda and the reform of IMF. Deputy Governor Yi Gang attended the meeting.
The meeting was of the view that the global activity continued to strengthen. However, the upturn of the global economy is not on a solid footing and downside risks remain. The US grew faster than expected and growth in the euro area as a whole has turned positive. Growth in Japan has moderated. Emerging market economies continue to account for the bulk of global growth, but face a more complex domestic and external environment. In the global outlook, downside risks include very low inflation in some advanced economies and renewed market volatilities to be properly handled by the emerging economies. The US should orderly exit its unconventional monetary policy while the euro area should take necessary measures to prevent deflation. Japan needs to formulate robust mid-term fiscal consolidation plan while emerging and developing economies need to adopt appropriate policy measures based on their specific circumstances. All countries need to continue structural reform.
The meeting expressed deep disappointment with the continued delay in progressing the IMF quota and governance reforms agreed to in 2010 and the 15th General Review of Quotas (GRQ) including a new quota formula. The meeting reaffirmed the importance of the IMF as a quota-based institution. As the implementation of the 2010 quota and governance reforms remains the highest priority of the IMFC, the meeting urged the US to ratify these reforms at the earliest opportunity to ensure the IMF has sufficient resources to maintain the stability of the global monetary system. It was decided at the meeting that if the 2010 reforms are not ratified by year-end, the IMFC will schedule a discussion on the options for the IMF to build on the existing work and continue reforms.
When briefing the meeting on the economic situation in China, Mr. Yi Gang pointed out that China has entered a period of moderate growth after continuing fast growth for many years. In this period, the quality of growth will be higher. China's economy is running within a proper range, as prices are generally stable, important progress has been made in the transformation of growth model, and both economic structure and the BOP account have improved. The Chinese government will continue the proactive fiscal policy and sound monetary policy and implement various reform measures including streamlining administrative procedures and delegating more powers to lower-level governments. The Government has confidence in achieving the goal of 7.5 percent growth in 2014 and has taken effective measures to address the risks in the economy.
Mr. Yi Gang pointed out that the continued delay in the implementation of 2010 formula and governance reform will directly affect the effectiveness, legality and credibility of the IMF. Since the IMF is a quota-based institution, the failure of effecting quota increase will undermine the institution's ability to address future crises. He urged the members who have yet to ratify the 2010 reforms to complete the procedures as soon as possible and call on the IMF and member countries to make progress in preparing for the 15th General Quota Review so as to complete the review by January 2015.