Meetings of the International Monetary Fund and the World Bank this week in Tokyo see more uncompleted projects than ever before. IMF chief Christine Lagarde has called for policy action to boost economic growth.
""The annual meetings of the International Monetary Fund (IMF) and the World Bank are the perfect opportunity for taking stock of the present global economic situation," IMF Christine Lagarde said recently at the Peterson Institute for International Economics in Washington.
But she immediately had a response: "The global economy is still marred by uncertainty, and is still not where it should be," she noted, comparing the economy to a puzzle, in which some of the pieces have been put together, put the entire picture is not yet complete.
In Lagarde's opinion, Europe remains the epicenter of the global crisis. The slow speed of reforms in Europe is one of the reasons the IMF will once again revise downwards its forecast for the global economy. In July, the Monetary Fund already cut its estimated growth rate for 2012 slightly to 2.5 percent and for 2013, to 3.9 percent.
In the world economy forecast to be presented in Tokyo on October 9, Lagarde said the figures would again be lower. She also pointed to other matters that have yet to be resolved, but which must be discussed in Tokyo: "There is the unequal economic development in the eurozone, there are domestic budget problems and the lukewarm economic recovery in the US. There's the slowing of the emerging economies, the concerns of developing countries about exploding food prices and the dramatically fluctuating prices of resources - and finally, there's the growing disappointment in the Middle East," she pointed out.
But Lagarde also praised the measures taken by the central banks - particularly in Europe, the United States and Japan - for reinvigorating weakened economies through monetary policies. She said the initiatives played a leading role in preventing the global economy from falling into a major recession. She said it is now up to politicians to combat high unemployment and massive domestic debt while continuing to repair the financial sector.
Redistributing voting rights
The IMF aims to better equip itself for upcoming challenges - by improving tools of analysis, creating a better early warning system, advancing security nets for global financial markets, and reforming IMF's own bodies. Now, in Tokyo, the plan which the G20 passed two years ago is supposed to come to fruition: a redistribution of voting rights to benefit emerging economies.
Emerging economies and developing countries will thereby see a six-percent increase of their voting interests to just under 45 percent. China will double its own, and Brazil and India will be among the Top Ten members for the first time ever. Germany's voting interest will drop slightly from just under six percent to 5.3 percent - a development which is no cause for concern, according to German finance minister Wolfgang Schäuble.
Lagarde said the finish line had nearly been reached, and that she would do everything in her power to ensure that member nations would, this time around in Tokyo, live up to the promises they made in 2010 to implement policies to secure global recovery.