Meeting of the IMF and World Bank with Europe
The rise of financial tensions in Europe, negotiating to expand the IMF’s resources and the selection of a new World Bank president, will mark the spring meetings of both bodies to be held this coming week in Washington.
The traditional April meeting will open on Tuesday with the publication by the International Monetary Fund (IMF) in its “Global Economic Prospects” report that examines the status of the global economy and provides forecasts on key economic indicators.
Also, the agency will release its fiscal and financial reports, especially expected by fiscal consolidation process in which a majority are engaged in advanced economies and the financial market tensions.
Just to contain these tensions, is scheduled to discuss the expansion of IMF lending resources, in order to increase their “efficiency” and to act as a “circle of protection” in the words of Managing Director, Christine Lagarde.
The Fund warned in January that its lending resources could be limited if the crisis deepened sovereign debt in Europe, noting the goal of expanding to 500,000 million through contributions from its member countries.
However, last week at a conference in Washington, Lagarde said the world economy had won “breathing room” so that the resource requirements “may not be as great as we had estimated at the beginning of the year” he said without specifying a new figure.
Once again Europe will be one focus of attention with the new surge of financial stress in recent weeks, especially after the rise in risk premia on sovereign debt of Spain and Italy and recession experienced by some European economies.
Another observed data is the degree of advancement of the U.S. economy and the slowdown of China’s economy, second in the world.
As part of the many meetings taking place this week, the finance ministers of G-20 meet again after the Mexico summit two months ago to study measures to revitalize the economic growth and try to enhance the output of the financial crisis.
The World Bank also host various events and shall announce the election of its new president, who will replace Robert Zoellick announced that he would not opt for re-election and will attend his last meeting after five years in office.
Candidates in the running are South Korean-born American Dr. Jim Yong Kim and Finance Minister Ngozi Okonjo-Iweala Nigeria, following the resignation of Colombian economist Jose Antonio Ocampo.
The direction of the IMF and World Bank, agencies emerged after the Bretton Woods agreement in 1944, has been distributed since its creation between Europe and America, respectively, so Kim is considered the favorite to be named president.
Emerging countries, with the BRICS (Brazil, Russia, India, China and South Africa) to the head, have called for a greater presence in decision-making bodies of both multilateral financial institutions to reflect their growing economic power.
The week will conclude with a plenary meeting of the Monetary and Financial Committee of the IMF, the chief executive of the institution, on Saturday.
The meetings of the IMF and World Bank are held twice a year in spring and autumn, and in October will take place at Tokyo.
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