Summary from the International Monetary Fund’s spring meeting on 12 April
Date
15/04/2008
At the 12 April the International Monetary Fund’s (IMF) policymaking body – the International Monetary and Financial Committee (IMFC) – held a meeting as part of the spring meetings of the IMF and the World Bank. The Swedish delegation included Riksbank Governor Stefan Ingves and Minister of Finance Anders Borg.
The purpose of the IMFC’s meetings is to discuss current international issues within the IMF’s field of responsibility and to provide guidance for the institutions’ work. Sweden’s positions in the IMF are determined in consultation with the Nordic-Baltic Constituency to which Sweden belongs.
The global economic situation and current policy issues: this is particularly important in the light of the US housing crisis and the weaker international economic activity. The IMFC noted that global financial instability has increased since its last meeting and that growth prospects for 2008 and 2009 have deteriorated. It was agreed that continued efforts are necessary to handle these challenges, while making sure that inflation is kept under control. The financial turmoil has also entailed an intensified discussion of the IMF’s role and tools for preventing financial crises. The IMFC welcomed a closer cooperation with other organizations in this area and planned to review progress at its next meeting.
Influence and representation in the IMF: an agreement on a reform of the countries’ influence in the Fund has now been essentially concluded after many years of discussion (the formal voting is due April 28 but the proposal is expected to be approved). The agreement includes a revision of the formula for calculating voting rights and raising the number of basic votes, which benefits low-income countries. Adjustments are also made to ensure that the strength of dynamic emerging market economies’ in the global economy is better reflected in their voting power in the IMF. In total, the reform increases the voting share of the emerging and developing economies by 2.7 percentage points. The agreement also includes that the quota formula is to be reviewed every five years, which is expected to result in further increases in the quota shares of emerging market and developing countries.
The future funding of the IMF: the ongoing parallel income and expenditure reforms were discussed. The expenditure reform includes both relatively substantial staff cutbacks (380 posts of a total of around 2,500 IMF employees) and rationalisation. In total, net spending will be reduced by 13, 5 percent in real terms over the next three years. The proposed measures regarding income include gold sales and new investment mandates.
FACTSThe International Monetary and Financial Committee is the IMF's policymaking body. The Committee meets twice a year, once in the spring and once in the autumn in connection with the IMF's annual meeting, to discuss the global economy and other issues relating to the IMF's activities. The Committee’s overall purpose is to promote trade and growth by promoting international monetary cooperation and macroeconomic and financial stability. The IMFC consists of 24 members, a central bank governor or a finance minister from each country or constituency in the IMF. Sweden is part of a constituency together with Denmark, Estonia, Finland, Iceland, Latvia, Lithuania and Norway. At present our constituency is represented on the IMFC by the Swedish finance minister.
