22 April 2006
Remarks by Rt Hon Gordon Brown, Chancellor of the Exchequer, at the conclusion of the International Monetary and Financial Committee meeting of the IMF, Washington
Let me say, first of all, that the IMFC committee met today recognizing that while we are seeing strong expansion in the global economy, this is a time of profound change as a result of globalization, and it is also a time of risk, particularly from high and volatile oil prices and the dangers of protectionism. And faced with these challenges ahead, the members of our committee meeting today decided that 2006 will be a year of reform for the international economy.
We resolved to make the IMF more fit for purpose in a global economy, and more able to address challenges that are quite different from those of 1945 when the IMF was created.
We resolved on the recommendation of the Managing Director that in future the IMF should be more able to address global questions with multilateral surveillance, like current account imbalances, the impact of oil prices and financial sector questions, and the IMF should monitor in future more deeply not just country policies but the linkages and spillover effects of one country's policies on others in the global economy. And we were in total agreement that members shared a general responsibility for global issues and mutual responsibilities to each other that should be reflected in our new approach to multilateral surveillance.
Specifically, we agreed the IMF must focus more on crisis prevention, as well as crisis resolution, that multilateral as well as bilateral surveillance would become of increasing and central importance, and that we would agree an annual surveillance remit built on multilateral and bilateral surveillance of monetary, fiscal, exchange rate policy frameworks and financial sector issues, and we propose that our surveillance work will take the form of that annual remit and this will involve independence of the surveillance work, greater transparency and of course work by the Independent Evaluation Office.
We also agreed that to reflect changing times, voice, votes, and quotas should reflect the changing international economic weight of countries in the global economy.
The committee reiterated that the IMF's effectiveness and credibility as a cooperative institution must be safeguarded and its governance further enhanced, and we emphasized the importance of fair voice and representation for all members.
We underscored the role and ad hoc increase in quotas would play in improving the distribution of quotas to reflect important changes in the weight and role of countries in the world economy.
The committee agreed on the need for fundamental reforms, the committee called upon the Managing Director to work with the IMFC and the Executive Board, to come forward with concrete proposals for agreement at the Annual Meetings in Singapore in September.
We also welcomed the IMF's efforts under the Managing Director's leadership to strengthen its engagement with emerging market country members, particularly focusing on financial and capital markets, and stressed the importance of the funds work in low-income countries.
We welcomed the debt relief agreed now by IMF and World Bank, and we will continue progress toward matching bilateral with multilateral debt relief for the poorest countries. So, today we agreed that Singapore's annual meeting will become a reform summit, since its origin 60 years ago the IMF has had to cope with the fast-changing forces at work in the global economy, originally having to cope with sheltered, protected, and closed economies, and temporary support for balance of payments issues, we recognize today that the IMF must now cope with open not closed economies; with international not regional flows of capital, and the reforms we have agreed today are designed to equip the IMF best for these future challenges.
We also addressed the challenge of high and volatile oil prices. We welcomed the actions already taken to address capacity, but believe there are still constraints on oil production. We called for further measures to improve the supply and demand balance in oil markets over the medium term, with oil producers, oil consumes, oil companies all playing their part, including through closer dialogue. The International Energy Forum meets on Monday.
We call for strengthened dialogue about the needs of both producers and consumers. We propose further efforts to improve the quality and transparency of market data to ensure informed and educated markets, more frequent, more relevant and more comprehensive data with more detail on reserves and including gas as well as oil.
We called for an increase in investment so that we could meet needs both upstream and downstream in the future.
We emphasized policies to promote energy conservation, and alternative sources of energy. And the World Bank energy investment framework will be discussed at their meeting of the Development Committee tomorrow to promote greater use of cleaner and more efficient energy sources in developing countries and emerging market countries.
We also agreed that the new IMF shocks facility, which has been designed and promoted by the Managing Director, must be equipped to respond to shocks both from commodity prices, including oil and natural disasters, we welcome the contributions made already to the new facility, including today from Saudi Arabia, but we call on members, including other oil producers, to ensure that that facility is fully financed to help countries deal with oil and other shocks.
The committee decided that we want to a further report by Singapore on the dialogue between consumers and producers on greater transparency, on investment needs, and on energy efficiency for the future.
We also recognized the dangers of protectionism and the beggar-thy-neighbor policies which did so much damage in the 1930s that had to be avoided now, the committee called on all members to resist protectionism in both trade and direct investment. We recognize the importance of ambitious and successful outcome to the Doha Round for global growth as well as for poverty reduction, and we call on all members to contribute urgently to reaching that agreement on a comprehensive package that would support a strengthened multilateral trading system.
We called also for further progress to help poor countries take full advantage of the opportunities of global integration through ambitious trade liberalization and we called for trade assistance and the full use of trade-related technical assistance
So today, faced with the profound changes and challenges that we see around us are taking place in the global economy, and faced with the pressures that we see in the immediate sense from rising oil prices and protectionist sentiment, the committee in my view made clear its resolve that we shall meet the challenges that the IMF will equip itself for the longer term, and that we will make 2006 a year of reform for the international economy by our new approach to multilateral surveillance and by our reform of the governance quotas and representation of the IMF itself.