IMFC meeting deliberated latest global economic developments

Obaid Humaid Al Tayer, UAE Minister of State for Financial Affairs, recently participated in the virtual International Monetary and Financial Committee (IMFC) meeting, which took place alongside the annual meetings of the International Monetary Fund (IMF) and the World Bank Group.

The meeting deliberated the latest global economic developments and the financial and economic repercussions of the COVID-19 pandemic. That, in addition to the challenges related to poverty and high debt risks and other issues related to international economic and development policies.

Al Tayer praised the IMF’s efforts aimed at achieving global economic recovery, as the latest global growth projections revised upwards to 6 per cent for 2021.

This is a strong reflection of the decisive and joint interventions that the Fund’s members have made to sustain economies and mitigate the repercussions of the unprecedented global health crisis.

Al Tayer noted that the UAE shares the IMF’s concerns over the prospects of imbalanced, K-shaped, recovery, especially for the Mena region. The pandemic’s dis-proportionate economic and social effects, will widen inequality gaps. This requires constituency from all relevant parties to continue to remain vigilant, particularly when balancing medium-term fiscal priorities with inclusive development objectives.

He said: “We welcome the Global Policy Agenda devised by Kristalina Georgieva, Managing Director of the International Monetary Fund, as a comprehensive framework for recovery.

The UAE will continue supporting the IMF’s endeavours to mitigate the financial and economic repercussions of the pandemic to achieve global recovery and attain strong, sustainable, balanced and comprehensive economic growth.”

Al Tayer noted that the health response remains to be the pressing priority that will continue to enable growth. The production and the fair distribution of the vaccine are equally important to ensure a fast and sustainable recovery. His Excellency said that the UAE has recently joined the global efforts to manufacture the COVID-19 vaccine, with a target of producing 200 million doses a year of the Hayat-Vax vaccine.

He also noted that middle-income countries are struggling with the need to continue to fund the health response and to preserve preventive measures. With the lack of concessional financing mechanism, these needs have already started to exhaust fiscal capabilities and expose debt vulnerabilities.

To this effect, the Fund should deploy all the tools at its disposal including lending, surveillance, and technical assistance.

He also mentioned that the UAE welcomes the reallocation of Special Drawing Rights (SDRs) in this regard.

Al Tayer said: “Beyond just recovery, we must pursue socially inclusive and environmentally sustainable models of growth as the only path forward in the post COVID-19 era, where the IMF can support by facilitating the exchange of expertise, supporting capacity building, and enabling funding efforts.”

He added: “As a general principle, we urge the IMF to advance its climate agenda in accordance to the Paris Agreement, which enjoys multilateral consensus, by supporting countries to achieve their Nationally Determined Contributions, while considering their national circumstances and development priorities.”

The IMFC meetings are part of the World Bank/IMF Spring Meetings, during which advice and reports are provided to the IMF Board of Governors on supervision and management of the international financial and monetary system, including response to current events that may disrupt the system.

Meanwhile the IMF said it will raise its forecast for global economic growth in 2021 and 2022 after last year’s 3.5 per cent contraction, but financial conditions remain highly uncertain, IMF Managing Director Kristalina Georgieva said on Tuesday.

Georgieva said the global economy was on firmer footing after governments spent some $16 trillion on fiscal measures to contain the COVID-19 pandemic and mitigate its economic impact. However, developments are diverging dangerously across regions and countries, and even within nations.

“Vaccines are not yet available to everyone and everywhere. Too many people continue to face job losses and rising poverty,” she told the Council on Foreign Relations ahead of next week’s release of the fund’s updated World Economic Outlook. “Too many countries are falling behind.”

Georgieva said the world was at a critical turning point, much as it was in 1945 when the IMF and World Bank were created, and called for continued strong actions to safeguard the recovery, ramp up vaccine production and distribution, and invest in a new green and digital infrastructure.