U.S. Treasury Secretary Timothy Geithner on Tuesday called on the International Monetary Fund to provide rigorous surveillance to spot new investment bubbles and keep country foreign exchange policies in line with goals to rebalance the global economy.
In remarks prepared for delivery to the IMF and World Bank annual meetings here, Geithner said the IMF needed to help police economic and currency policies among the Group of 20 developed and emerging countries.
“The IMF will need to be a truth-teller,” Geithner said in the remarks, which were to be delivered by Treasury Acting Assistant Secretary Mark Sobel.
“For the IMF, this means that rigorous surveillance must help us shed light on trends that could lead to the next unsustainable boom,” Geithner said. “Under the new G20 framework for strong, sustainable and balanced growth, the IMF must provide forward-looking analysis of whether the world's major countries are implementing economic policies, including exchange rate policies, which are collectively consistent with G20 objectives.”
Geithner said the global economy was stabilizing and showing initial signs of recovery but conditions remained fragile. He said the international community had recognized that “the world cannot return to a pattern of uneven growth, characterized by an excessive reliance on a single engine of consumption-led growth, while others relied heavily on external demand.”
“First and foremost, the responsibility for tackling these problems rests with sovereign governments, including my own,” he said.
Geithner added that the IMF and World Bank needed to enhance their legitimacy and the United States was “delighted” with international commitments for a shift of at least 5% in IMF quota share toward “dynamic underrepresented countries” by January 2011 and by a call to shift at least 3% of voting power in the World Bank by spring 2010.
Geithner called the World Bank the “centerpiece” of the multilateral development system, but said it will need to focus more on building resilience to crises and laying foundations for prosperity, with a special focus on support for the poorest, Geithner said.
“With concessional financing deploying more quickly, donors must commit to successful and timely replenishments of IDA and the African Development Fund, Geithner said. “When considering the MDB capital requests, we must recognize the importance of maintaining the IBRD's financial soundness.”
He said the World Bank must more actively prioritize work on three emerging global priorities: agriculture and food security, support in the most fragile environments, and facilitating a transition to a green economy. (Reuters)