Summary from the International Monetary Fund’s spring meeting on 25 April 2009
The International Monetary and Financial Committee (IMFC) met on 25 April in connection with the regular spring meeting of the IMF and the World Bank. The Swedish delegation included the Governor of the Riksbank, Stefan Ingves, and the Minister of Finance, Anders Borg.
The purpose of the If’s meetings was to discuss current international issues within the IMF’s field of responsibility and to provide guidance for the institution's operations. Sweden's view of the IMF is determined in consultation with the constituency of Nordic-Baltic countries of which Sweden is a part.
The main issues discussed at the IMFC meeting were:
The global economic situation and current policy issues
The IMF’s chief economist Olivier Blanchard predicted that the global economy should return to a positive growth rate by as soon as the fourth quarter this year, followed by continued positive but weak growth in 2010. However, this would require countries to take the necessary measures to restore stability in the financial system. The IMFC emphasised the Fund’s central role in crisis management and welcomed the reforms made to adapt the Fund’s ”toolkit” to enable it better to meet the needs of member countries. Among other measures, the IMF has introduced a new flexible lending facility, FCL. Several countries have already applied to utilise this facility, including Mexico, Poland and Colombia.
Financing of the IMF
The strongly increased demand for loans from the Monetary Fund is presenting additional requirements as regards resources. Short-term bilateral commitments regarding the loan of USD 250 billion to the IMF had already been agreed upon before the meeting. These commitments imply a doubling of the Fund’s lending capacity. The largest lenders are the EU and Japan, who have undertaken to lend USD 100 billion each. The subsequent intention is for these short-term lending commitments, together with further contributions, to be converted into loans of a more long-term nature within the framework of the so-called New Arrangements to Borrow, or NAB (see below). The goal is to increase the NAB’s resources by a factor of ten, from USD 50 billion to 500 billion.
NAB=IMF’s “reserve tank” for lending
A meeting regarding the NAB was also organised in conjunction with the IMFC. The NAB can be regarded as the IMF's "reserve tank" for lending when its own resources are not sufficient. In addition to the twenty-six countries and institutions that are already members of the NAB, the G20 countries that are, as yet, not members of the NAB were also invited to the meeting for the first time. This invitation was intended to enable an extension of the group of contributors. Many countries were positive towards the idea of making new contributions to strengthen the Fund’s resources.
One issue that was not formally included on the agenda, but which was nevertheless mentioned in several contributions from the ministers was that of the governance of the Fund and the representation of member countries. Anders Borg, representing the constituency of Nordic-Baltic countries at the IMFC meeting, expressed the opinion that any decisions affecting the broader group of members must also be discussed in a forum in which all countries are represented. At present, important discussions, forming the basis for decision-making, are conducted in informal groupings. This implies that a number of countries that contribute financially to the IMF’s activities are not granted a reasonable degree of influence. The Nordic-Baltic constituency consists both of countries receiving support from the Fund and of countries making significant contributions to the Fund’s resources, and must, therefore, be provided with the opportunity to exert influence in the discussion of important decisions. The IMF, which represents no less than 185 countries, is the natural forum for discussions of the functioning of the global economy and economic situation. A number of the following speakers expressed their support of this statement.
