October 9, 2016
Delivering on the 2030 Agenda
Statement by the Heads of the African Development Bank, the Asian Development Bank, the Asian Infrastructure Investment Bank, the European Bank for Reconstruction and Development, the European Investment Bank, the Inter-American Development Bank Group, the International Finance Corporation, the Islamic Development Bank, the New Development Bank, the World Bank, and the International Monetary Fund
- Last year, the Third International Conference on Financing for Development, the UN Sustainable Development Summit, and the 21st Conference of the Parties to the UN Framework Convention on Climate Change yielded some of the most ambitious global commitments ever made—commitments that are critical to improving lives and protecting the planet. The adoption of the 17 SDGs by the international community launched an ambitious 15-year global agenda to end poverty, fight inequality, and tackle climate change, while leaving no one behind.
- MDBs and the IMF play a critical role in supporting their member countries’ efforts to translate the SDGs that underpin this agenda into meaningful country-level targets, policies, programs, and projects needed to achieve them. They provide not only the necessary financing—either directly or by helping to “unlock” and catalyze additional public and private resources—but also policy advice and technical assistance supporting countries to build domestic capacity and to identify needed priority investments with the right standards. At the same time, the IMF and the World Bank are strengthening their debt sustainability assessment tools to ensure that investment scaling-up does not threaten the sustainability of public finances. To address the challenges of the 2030 Agenda for Sustainable Development, we are stepping up efforts—within our respective mandates and governance structures—to make the best possible use of our respective business models, enhance the multiplier effect of our financing, expand our technical assistance, disseminate and share our knowledge and best practices, and provide innovative and integral solutions to multidimensional development problems.
- Throughout 2016 we have continued to enhance our coordination and collaboration, and came together to agree on common actions to address critical issues of the 2030 Agenda such as forced displacement, infrastructure, urbanization, climate finance and private investment. We launched the first Global Infrastructure Forum in April, which brought together public and private partners to highlight opportunities for investment in order to bridge the infrastructure gap, and have already begun working on preparing the second Forum to be held at the same time as the IMF-World Bank Group Spring Meetings in April 2017, focusing on inclusive, sustainable infrastructure. Likewise, we committed to tackle forced displacement at the World Humanitarian Summit in Istanbul in May and we have started launching new facilities to address its root causes. Furthermore, through a special joint Task Force, the MDBs advanced on harmonizing methodologies and common metrics to quantify private finance catalyzed by our institutions. We intend to start jointly reporting measures of private direct mobilization and private cofinancing in 2017, building on existing joint MDB reporting of private climate cofinancing. We will encourage other Development Finance Institutions and OECD to adopt the same methodology, facilitating greater global transparency on the development community’s efforts to catalyze private finance. And finally, for the Habitat III Conference in Quito in October, MDBs will be joining forces to mainstream and implement the UN New Urban Agenda to promote equitable, sustainable, and productive urbanization.
- In Paris, countries committed to make a leap forward towards achieving climate resilience and net-zero emissions from 2050 onwards. MDBs are deeply committed to this agenda and are aligning our organizations and our joint actions with it. We are developing together a joint climate action partnership aimed at developing a more collaborative and coherent approach, within our respective institutional mandates, to working with countries to implement their NDCs and develop their adaptive capacities. We will focus on scaling up low-carbon and climate-resilient investments for sustainable infrastructure, including in particular speeding the energy transition consistent with the Paris Agreement. We will do this by aligning our financial flows with the countries’ pathways to low-carbon and climate-resilient development, by increasing the predictability and ease of access to concessional resources, such as the Green Climate Fund, and by leveraging private finance for climate investments. In addition, the IMF and the World Bank Group will provide technical assistance to countries seeking to implement carbon taxation as an efficient tool for containing emissions.
- Forced displacement poses a significant challenge to progress on the SDGs, and we have committed to work together on a new humanitarian-development partnership. Concessional financing and support for building institutional capacity for fragile and conflict-affected states are as important as ever. Additionally, we are working to bridge the gap between humanitarian and development assistance by ensuring support to countries hosting large numbers of refugees. Two new facilities are helping to do this: the World Bank’s Global Concessional Financing Facility, part of its Global Crisis Response Platform, and the European Investment Bank’s new Resilience Initiative for EU’s Southern Neighborhood and Western Balkans. Those complement other efforts already in place, such as IDB’s Alliance for Prosperity Plan in the Northern Triangle.
- In line with the Addis Ababa Action Agenda and the G20 call, MDBs have been individually and collectively implementing several measures to optimize our balance sheets, from exposure exchange agreements that diversify our portfolio concentration to merging and leveraging concessional windows with accumulated equity and increased liquidity. Furthermore, we are stepping up internal revenue and expenditure actions to increase available medium-term capital as part of a Value-for-Money agenda. Given the growing financing demands that the 2030 Agenda entails and the financial capacity limits which many of our institutions are reaching, efforts to optimize capital will continue. These efforts should be complemented by other mechanisms to reinforce MDB resources, including through necessary shareholder support.
- Going forward, we will redouble our efforts to scale-up financing for development as well as the capacity to achieve the SDGs by leveraging, mobilizing, and catalyzing resources at all levels. To that end, we are stepping up our efforts to further build up our range of instruments that share risk in non-sovereign operations with private investors, including syndications, structured finance, mezzanine financing, credit guarantee programs, hedging structures, and equity exposure. Moreover, we are working with our public and private sector clients, helping them create an enabling environment conducive to increased domestic and international investments. Likewise, MDBs and the IMF are expanding our policy guidance and technical assistance to support country efforts to increase their domestic resource mobilization. Furthermore, we are ramping up our support to countries to build data capacity to measure and monitor progress towards their global commitments. To build up a pipeline of well-prepared projects, in recent years, many of our institutions have launched new project preparation facilities. On the capacity building front, MDBs continue to collaborate across a number of joint platforms.
- The 2030 Agenda is a trillion-dollar one, and official assistance flows will be nowhere near enough to finance it. Meeting the SDGs will require building a financing framework that channels more resources from more sources, particularly the private sector. This requires enhancing existing partnerships and building new ones with the private sector—including institutional investors—to mobilize financing for development. With our country clients in the lead, we reaffirm our commitment as development institutions to deepen and widen our partnerships with both the private and public sectors. We will individually and collectively bring in emerging and existing global, regional, sub-regional and national partner institutions and, together, contribute to the success of the 2030 Agenda, helping countries to leverage the financing and knowledge of the MDBs and the IMF to address their most pressing development challenges and, as such, contribute to achieving the transformative outcomes that the SDGs entail.
October 8, 2016
Communiqué of the Thirty-Fourth Meeting of the International Monetary and Financial Committee (IMFC)
Chaired by Mr. Agustín Carstens, Governor of the Bank of Mexico
The global economic recovery continues slowly and unevenly, and growth is expected to pick up only slightly next year, mostly on account of emerging market economies. Economic performance and resilience have improved in some economies and near-term risks in financial markets have largely abated. Still, the outlook remains subdued against the backdrop of modest global demand growth and remaining output gaps; a slowdown in global trade, investment, and productivity; and rising geopolitical uncertainty and medium-term financial risks. The persistently low growth has exposed underlying structural weaknesses, and risks further dampening potential growth and prospects for inclusiveness. Lower productivity growth and remaining crisis legacies in advanced economies, challenges from ongoing adjustments and vulnerabilities in some large emerging market economies, and the effects of lower commodity prices on exporting countries continue to weigh down the outlook. Overall, uncertainty and downside risks are elevated, while longstanding headwinds persist.
The global economy has benefited tremendously from globalization and technological change. However, the outlook is increasingly threatened by inward-looking policies, including protectionism, and stalled reforms. We commit to design and implement policies to address the concerns of those who have been left behind and to ensure that everyone has the opportunity to benefit from globalization and technological change.
We reinforce our commitment to strong, sustainable, inclusive, job-rich, and more balanced growth. We will use all policy tools—structural reforms, fiscal and monetary policies—both individually and collectively. We are strengthening policies to bolster confidence and resilience, safeguard financial stability, and ensure that all members of society have the opportunity to benefit from globalization and technological change. We encourage countries hit hard by a persistent decline in their terms of trade to proceed with their policy adjustment. We recognize that excessive volatility and disorderly movements in exchange rates can have adverse implications for economic and financial stability. We will refrain from competitive devaluations and will not target our exchange rates for competitive purposes. We reaffirm our commitment to communicate policy stances clearly and resist all forms of protectionism. We will also redouble our commitment to maintain economic openness and reinvigorate global trade as a critical means to boost global growth. Our priorities include:
Growth-friendly fiscal policy. All countries should use fiscal policy flexibly and make tax policy and public expenditure more growth-friendly, including by prioritizing high-quality investment, while enhancing resilience and ensuring public debt as a share of GDP is on a sustainable path. Appropriate and credible fiscal policies along these lines will support growth, job creation, and confidence. Well-designed tax structures, as well as income policies where appropriate, can promote stronger growth, protect the vulnerable, and reduce inequality.
Continued supportive monetary policy. In advanced economies where inflation is still below target and output gaps remain negative, monetary policy should remain accommodative, consistent with central banks’ mandates, mindful of financial stability risks, and underpinned by credible policy frameworks. Monetary policy by itself cannot achieve sustainable and balanced growth, and hence must be accompanied by other supportive policies.
Prioritized structural reforms. Structural reforms are key to raising potential growth and would benefit from synergies with other policies to support demand. Tailored to country-specific circumstances, reforms must be reinvigorated, carefully chosen, and appropriately sequenced to yield the maximum growth benefits, raise productivity, and create opportunities for all, while assisting those who bear the burden of adjustment to globalization and technological change.
Effective financial sector policies. To help ensure that the financial sector is robust enough to support growth and development, we will intensify efforts to address remaining crisis legacy issues in some advanced economies and vulnerabilities in some emerging market economies, while monitoring potential financial stability risks associated with prolonged low or negative interest rates, systemic market liquidity risks, and nonbank intermediation. Timely, full, and consistent implementation of the agreed financial sector reform agenda remains an important priority, as well as finalizing remaining elements of the regulatory framework as soon as possible.
Stronger global cooperation. Concerted effort at the international level is key to boost global trade; sustain progress on global rebalancing; manage spillovers from economic and non-economic shocks; ensure a fair, efficient, and transparent international tax environment; tackle the sources and channels of terrorist financing, corruption, and illicit financial flows; and address the decline in correspondent banking relationships. Comprehensive, coordinated, and time-consistent policy actions that exploit synergies would amplify positive cross-border spillover effects of individual policy actions. We will continue strengthening the international financial architecture, including the global financial safety net.
The IMF has a key role to play in supporting the membership at this challenging time.
Policy advice and surveillance. To improve the policy mix for strong, sustainable, inclusive, job-rich, and more balanced growth, we support the work to: further enhance the consistency of the IMF’s fiscal policy advice, including on medium-term fiscal frameworks and by finalizing the work on assessing fiscal space, consistent with debt sustainability, and integrating it into country consultations; analyze how tax systems could have an effect on macroeconomic stability risks; and examine the implications of very low or negative interest rates, including their side effects. We support efforts to identify high-priority structural reforms in line with country-specific macroeconomic circumstances and structural factors, and encourage the IMF to continue to explore synergies and tradeoffs of different domestic policies in Article IV discussions. In this context, we take note of the ongoing work on developing a toolkit to support the formulation and implementation of structural reform recommendations in surveillance, and on expanding the infrastructure policy support initiative to more pilot countries. We support the IMF’s examination of the drivers of the global productivity slowdown and the intention to provide policy recommendations. We look forward to the review of countries’ experience with the IMF’s institutional view on the liberalization and management of capital flows, with a view to identifying emerging issues, as well as the future work on macroprudential policies, which taken together will help provide tailored and consistent policy advice in addressing macroeconomic and financial stability risks. We support the analysis of macrofinancial linkages in bilateral surveillance, drawing on the recent pilot cases.
The International Monetary System (IMS) and the support of multilateralism: We reiterate that strong domestic policies and effective IMF surveillance remain the keystone of crisis prevention. We welcome the recent work on further strengthening the global financial safety net, and call on the IMF to intensify cooperation with regional financing arrangements, including through the joint test run between the IMF and the Chiang Mai Initiative Multilateralization. We look forward to work by the IMF and other institutions on state-contingent debt instruments. We look forward to finalizing the ongoing review of the IMF’s lending toolkit to further enhance its effectiveness. We welcome the recent inclusion of the renminbi into the SDR basket, and look forward to the forthcoming examination of the possible broader use of the SDR. We call on the IMF to work toward enhancing international economic cooperation, including to facilitate the global adjustment process. We look forward to the IMF’s analysis of the drivers and policy implications of the global trade slowdown and the economic benefits of trade.
Opportunities for all: We look forward to further work on the impacts of globalization, emerging technologies, and digitalization. We welcome further work identifying the reasons behind rising inequality in some countries, including analyzing the causes behind the declining share of labor in output and understanding the impact of policies on inequality in both advanced and developing economies.
Low-income countries (LICs): We call on the IMF to continue efforts, in cooperation with other relevant international organizations, to help countries meet the 2030 Sustainable Development Goals and to integrate deliverables under the post-2015 development agenda into the IMF’s work. Work on LICs should focus on continued efforts to support growth and boost resilience in fragile states, and on helping those countries hardest-hit by commodity price shocks, including by designing a consistent set of policies that support growth. We call on the IMF to support LICs in their efforts to address investment needs, and provide advice on striking the appropriate balance between financing development needs and preserving debt sustainability. In this context, we support the work in progress to review the debt sustainability framework for LICs. We look forward to discussions on how to enhance countries’ access to precautionary financial support and reviewing current practices in regard to blending resources between the General Resources Account and the Poverty Reduction and Growth Trust (PRGT) under IMF programs. We look forward to the findings of the forthcoming review of social objectives in PRGT-supported programs. We welcome the extension of zero interest rates on all IMF concessional lending facilities for at least the next two years, through end-2018. We welcome the support received so far, including by new contributors, to mobilize additional loan resources for the PRGT, and call on members’ further support to the successful conclusion of these efforts.
Capacity building: We welcome the IMF’s focus on providing technical assistance and training to complement policy analysis, especially supporting LICs as well as fragile states and small states to boost their policy formulation and implementation capacities and strengthen economic institutions. Priorities for capacity building include: enhancing domestic revenue mobilization; building fiscal capacity in small and fragile states; broadening work on international taxation, including through the Platform for Collaboration on Tax; expanding capacity to strengthen monetary and financial stability; and supporting financial sector deepening.
Addressing other challenges facing members: We support the IMF’s work with other international organizations to address the decline in correspondent banking relationships and preserve access to financial services. This would include intensifying AML/CFT and supervisory capacity development support in respondent banks’ jurisdictions, clarifying regulatory expectations, and promoting industry solutions; promoting greater financial inclusion; and helping countries strengthen their institutions to tackle illicit financial flows. We also support work by the IMF to continue integrating inequality, gender analysis, and climate change in surveillance, when macro critical; help commodity exporters and LICs promote economic diversification; help building resilience to natural disasters and climate change; and strengthen analysis and support for countries managing spillovers from non-economic sources, such as large refugee flows and global epidemics. We welcome the entry into force of the Paris Agreement on climate change. We look forward to the forthcoming review of the Guidance Note on the Role of the Fund in Governance Issues.
We extend our sympathy to the governments and people of the Caribbean, especially Haiti, as the region grapples with the impact of Hurricane Matthew. We welcome the IMF’s readiness to help countries deal with the aftermath of this catastrophe.
IMF resources and governance
To help maintain the current lending capacity of the Fund, we welcome the pledges of SDR260 billion (US$360 billion) received from 26 members to ensure the IMF’s continued access to bilateral borrowing under the strengthened governance framework approved by the Executive Board; support the need for continued access to multilateral borrowing agreements; and call for broad participation of the IMF membership including through new agreements.
Looking ahead, we reaffirm our commitment to a strong, quota-based, and adequately resourced IMF to preserve its role at the center of the global financial safety net. We are committed to concluding the 15th General Review of Quotas and agreeing on a new quota formula as a basis for a realignment of quota shares to result in increased shares for dynamic economies in line with their relative positions in the world economy and hence likely in the share of emerging market and developing countries as a whole, while protecting the voice and representation of the poorest members. To provide adequate time to build the necessary broad consensus, we support the Managing Director’s proposal to reset the timetable for completing the 15th Review in line with the above goals by the Spring Meetings of 2019 and no later than the Annual Meetings of 2019, subject to adoption by the Board of Governors. We call on the Executive Board to establish a concrete work agenda to achieve this goal.
We support the efforts of the IMF to harness new technologies—including by improving knowledge management—to increase its agility and effectiveness. We reiterate the importance of maintaining the high quality and improving the diversity of the IMF’s staff. We also support promoting gender diversity in the Executive Board.
Our next meeting will be held in Washington, D.C., on April 22, 2017.