By Lee Hyo-sik
Staff Reporter
Finance ministers and central bankers from all over the world will gather in Istanbul, Turkey, on Oct. 6-7, to discuss issues of global concern, including the world economic outlook, poverty reduction and economic development.
With the global economy beginning to emerge from the worst slump since the Great Depression in the 1930s, financial leaders are expected to extensively deal with a range of issues, including the facilitating of the ongoing recovery and overhauling the global financial market regime.
Their agendas also include how to reduce poverty in poorer countries and reform the governance of the International Monetary Fund (IMF) and the World Bank.
Following the G20 summit meeting from Sept. 24 to 25 in Washington, the 2009 Annual Meetings of the IMF and the World Bank will be crucial in setting up strategies for the aftermath of the global financial crisis.
The IMF said coordinated policy action by the world's leading economies has helped pull the global economy back from the brink of the collapse, stressing now is not the time to relax. In a recent speech in Berlin, IMF Managing Director Dominique Strauss-Kahn emphasized the recovery will be sluggish and that a jobless recovery remains a risk.
``We are concerned about the social and economic costs of high unemployment, which will persist even as financial markets and output stabilizes. We remain cautious about the outlook for growth and jobs, and are particularly concerned about the impact on many low income countries,'' he said.
The managing director then said even though the global economy is beginning to rebound, the pace of the recovery is uneven and remains dependent on policy support.
``Going forward, the rebound will be sluggish. Private demand is likely to be held back for some time by limited credit availability, household desire to rebuild balance sheets, and still-rising unemployment. We are emphasizing that stimulus measures adopted to combat the crisis should be withdrawn only when the economic recovery has taken hold and unemployment is set to decline,'' he said.
With lingering uncertainties for the world economic outlook, the Washington-based organization said the Istanbul meeting will be a good occasion for financial leaders to cover a range of key issues under the slogan of ``Resolving Crisis, Building Recovery.''
As the economy recovers, there will be a need for a global rebalancing of demand across countries, which will require strong policy actions, including fixing the financial system in advanced economies and boosting domestic spending in emerging Asia.
While financial sector policies have been instrumental in stabilizing market conditions, additional measures are needed to restore the financial system to health, including further recapitalization and dealing with problem assets.
Incentives should be put in place to encourage healthy banks to progressively reduce their dependence on public support. The annual meeting participants are also expected to examine ways of strengthening the global financial system.
The key challenge is to map a course between unwinding public interventions too early, which could jeopardize progress in securing financial stability and economic recovery, and withdrawing them too late, which could distort private incentives and create new risks.
Regulation and supervision must do a better job of looking out for risks across industries and between countries, and provide a complete picture of risks.
The IMF will continue its surveillance of the international financial system, raising flags about potential problems and presenting policymakers with options of how best to respond. It also plans to provide technical assistance to countries as they design and implement reforms to improve regulation of their financial sectors.
The IMF is widely expected to undergo changes in its governance structure, with more shares being reallocated to China and other emerging economies.
The readjustment of the vote quota has been a contentious issue as developing economies demand a greater say in the management of the international body, while developed nations stay largely reluctant to yield their stakes.
But following the global financial crisis and the emergence of the developing countries, quotas will likely be taken away among the former and be reallocated among the latter.
Besides the one-day plenary session of the 186 members of the IMF and the World Bank on Oct. 6, which will feature major addresses from the host government, heads of institutions, and the governors of the bank and fund, there will be several sessions at which discussions are focused on a broader resolution of the economic crisis and long-term reform of the global financial system.
They include meetings of the International Monetary and Finance Committee (IMFC), the 24-member ministerial policy guidance body of the IMF, and the Development Committee, a forum of the World Bank and the IMF that facilitates consultation and consensus-building on development issues. The IMFC will meet on Oct. 4 and the Development Committee on Oct. 5.
These gatherings will provide an opportunity for finance ministers and central banks from all countries to get together to discuss global economic issues and give guidance to the IMF. The communiqu?s that are issued after the meetings of these committees provide important guidance to the Executive Boards of the two institutions.
Both the IMF and the World Bank were conceived at an international conference organized in Bretton Woods, the United States, in 1944, and held their first annual meetings in Washington in 1946.
The aims of the IMF and the World Bank are to raise living standards in member countries. The IMF works to do so by monitoring the stability of the international financial system, and the World Bank focuses on reducing poverty and setting up long-term economic development plans.