Werner said the IMF has also benefited from a more stable relationship, taking lessons learned from governments in Latin America, such as Chile’s rainy day fund made up of windfall copper revenues or Mexico’s and Brazil’s direct cash transfers to the poor, and applying them in other parts of the world.
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The world’s finance ministers and central bankers were beginning to arrive in Lima for the joint annual meetings of the World Bank and IFM that run through Sunday.
And this should be expected, looking at developments in the world economy – a full plate of issues such as the transformation in China’s economy, the fall in commodity prices, which is related to China, and the impending normalisation of United States of America (USA) monetary policy and its implications on the global economy. “The recommendation is for an urgent upgrade in policies, so as to avoid downside risks and to achieve our upside scenario of “successful normalisation” of monetary and financial conditions”, IMF Financial Counsellor Jose Vinals said. They want a bigger say in the running of the International Monetary Fund and the World Bank. The US also dominates the World Bank, have selected every one of its presidents since 1944.
“We have a tough growth scenario”, said Alejandro Werner, a former Mexican finance official who oversees the IMF’s relations with Latin America.
“The holy grail of robust and synchronized global expansion remains elusive”, said the IMF´s new chief economist, Maurice Obstfeld, warning that China´s slowdown and the resulting slide in commodity prices was weighing down the world economy. To that end, Treasury Secretary Jacob Lew said the U.S.is doubling funding to help developing countries improve their technical expertise.
On Tuesday, the International Monetary Fund cut its global growth forecasts to 3.1 per cent this year and 3.6 per cent in 2016, both numbers 0.2 percentage points lower than forecasts just three months ago.
The Chinese government says it expects growth to slow further to about 7.0% this year, and the IMR is forecasting 6.8%.
Turning to emerging economies, Lagarde said their room for policy maneuver to support demand is narrowing, with commodity exporters facing a painful adjustment due to rising financial vulnerabilities, low prices for their products, and deteriorating public finances.
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“Especially in the case of exhaustible mineral and hydrocarbon wealth, many countries have apparently suffered from what is often termed a ‘resource curse, ‘” when a country with abundant natural wealth lags in development for a range of complex reasons, it said.
