(MENAFN- The Peninsula) The International Monetary Fund warned in a communique yesterday that while economic growth in developed countries had strengthened, some emerging nations were being hit by weaker commodity prices and exports.
With the United States poised to hike interest rates, the IMF member nations said it was essential that moves to "policy normalisation" were accompanied by effective communication of changes to reduce risks of spillovers. "The possibility of lower growth potential is becoming a more relevant challenge over the medium term," the IMF's steering committee said in a communique during the Fund's spring meetings in Washington.
Those meetings conclude today and have taken place amid growing concerns cash-strapped Greece will fail to reach agreement with its European Union and IMF creditors. At the same time, risks of a stronger dollar and low commodity prices have hit emerging markets as China's blistering economic growth has slowed.
Low inflation remains a concern for many developed economies despite signs the European Central Bank's quantitative easing programme has boosted Europe's ailing economy, and the communique called for accommodative monetary policy to be maintained where needed.
"Global imbalances are reduced from previous years, but a further rebalancing of demand is still needed," the communique said. That appeared to echo US concerns over Germany's huge current account surplus.
While there has been little sign at the meetings of a renewed flare-up in the "currency wars" despite a surge in the value of the dollar against the euro and yen, China's growing economic clout has overshadowed the talks.
Beijing has touted its own development bank, a rival to the established Washington-based institutions, and is pushing for the inclusion of its currency in a key IMF basket to reflect its economic might.
Meanwhile, The Group of 20 leading economies on Friday discussed ways to raise emerging countries' voting rights at the IMF as part of an effort to move past US foot-dragging on reforms to the institution, but they failed to reach an agreement.
The IMF's member countries agreed in 2010 to give more voting power to countries like China and India, double the Fund's resources, and reduce the dominance of Western Europe on its 24-member board.
But the Obama administration, which supports the reforms, has been unable to persuade the US Congress to pass funding changes necessary for the agreement. The United States can block the IMF reforms because it holds a controlling share of votes.
To get around the United States, the IMF's board had proposed one "interim" plan to raise the voting rights of some emerging countries under an "ad hoc" increase without touching US veto power. That plan was discussed, along with another proposal to push through the voting reforms without doubling the Fund's resources, which would see the loss of the US veto, according to officials in attendance.
The "ad hoc" interim plan made it into a draft communique by the G20 finance ministers and central bank governors, but it was dropped from the final version after officials failed to come to an agreement.
Legal Disclaimer:
MENAFN provides the information “as is” without warranty of any kind. We do not accept any responsibility or liability for the accuracy, content, images, videos, licenses, completeness, legality, or reliability of the information contained in this article. If you have any complaints or copyright issues related to this article, kindly contact the provider above.