Warning against complacency in the current phase of global economic recovery, IMF chief Christine Lagarde has asked the members of G20 group, which includes India, to step up reforms by reducing trade barriers and subsidies to promote a level playing field.
Complementing the G20 leaders for adopting an action plan to strengthen the global financial safety net during the two- day Summit that ended last night, Lagarde said the world needs to continue to collaborate to address risks and ensure strong, sustained, balanced and inclusive growth.
“An essential part of this effort must be to reduce trade barriers, subsidies and other measures that distort trade.
“We can strengthen global trading system by reaffirming our commitment to well-enforced rules that promote competition while creating a level playing field,” she said.
Lagarde, who met various G20 leaders at the Summit, including Prime Minister Narendra Modi, called for urgent action to strengthen global growth and build inclusive economies while keeping away from complacency.
The IMF chief said in a post G20 statement that in her discussions with leaders she noted the good news that the global economic recovery is on track, broad-based, and expected to continue into next year.
“At the same time, I warned about complacency and risks,
including elevated financial vulnerabilities, low
productivity, and rising inequality,” she said.
“The current period of growth should be used as an opportunity: to further safeguard the financial sector by building up capital buffers and strengthening corporate and bank balance sheets,” Lagarde added.
She said the current period of recovery must also be used to address the issue of stagnant real wages which can undermine the recovery and fuel discontent, and to confront the problem of excessive current account imbalances — with both surplus and deficit countries playing their part.
Among immediate priorities, she also suggested increasing productive infrastructure investment, promoting financial inclusion especially for women, investing in human capital and accelerating labour market reforms.
Lagarde further said: “I strongly welcome the G20's focus on climate change, the sustainable development goals, and the challenges facing low-income countries.
“I commend, in particular, Germanys leadership in launching the Compact with Africa, which is designed to boost private investment across the continent.
“The countries involved in the first wave of this effort are already receiving support from the IMF — to help strengthen their macroeconomic frameworks and institutions, including by increasing support for capacity development.”
Noting that the Hamburg Action Plan includes an emphasis on strengthening the global financial safety net, with a strong, quota-based, and adequately financed IMF at its centre, she welcomed the G20 Leaders highlighting the importance of the IMF in continuing to provide capacity development in the area of anti-money laundering and countering the financing of terrorism.