The world’s financial leaders vowed to work together support global economic growth and address risks, including trade tensions, high global debt and rising financial vulnerabilities.
The International Monetary Fund’s policymaking body met in Washington on Saturday and issued a communique calling for cooperation to secure the recovery, promote inclusion, and expand opportunities. Trade was a key focus.
“If you model tariffs on a large portion of the goods that are traded, you take the entire volume of goods traded between the U.S. and China, in particular, $500 billion you apply tariffs to that. You are at risk you are putting at risk .8 percent of global growth. If on the other hand, you eliminate only 25 percent of the barriers on the trading of services, you obtain the same result except positive. So minus .8, if you put heavy tariffs on the goods, plus .8 if you eliminate 25 percent of the tariffs on services,” said IMF Managing Director Christine Lagarde after the meeting of the International Monetary and Financial Committee (IMFC).
In the IMFC news briefing, Lagarde was asked about increasing political pressure on central bankers. She responded that many central bankers agreed on the need for accountability, transparency and clear, understandable communication.
“All of them were saying, we need these three components in order to be credible and in order to deliver on our mandate. And they have different mandates, and there are different ways around the world to organize one's selves, clearly, when you are a Central Bank Governor. But independence has served them well over the course of time and hopefully will continue to do so.”
Lagarde also said the IMF’s recent agreement with Zimbabwean officials on macroeconomic policies and structural reforms that can underpin a Staff Monitored Program comes at a critical time after the devastating Cyclone Idai.
“We will be conducting a staff monitored program with Zimbabwe. And it is particularly appropriate that we do that expeditiously, given the hardship and the loss caused by the recent cyclone. And we will mobilize energy in order to support the authorities. I can assure you that, on the principle of social protection of the most vulnerable, of inclusion, we will be deploying the principles by which we now operate. As I have announced to the IMFC this morning, a social protection framework is going to come up for discussion at the Board in the next few weeks, and we will certainly endeavor to deploy social protection principles in the work that we do with the authorities.”