Global macroeconomic and financial impact of current wars and conflicts

• Chair’s statement fiftieth meeting of the IMFC

In the context of the Fiftieth meeting of the IMFC that took place in Washington, DC on 24 and 25 October, several IMFC members discussed the global macroeconomic and financial impact of current wars and conflicts, including with regard to Russia, Ukraine, Israel, Gaza, Lebanon, and in other places. IMFC members underscored that all states must act in a manner consistent with the Purposes and Principles of the UN Charter in its entirety. They acknowledged, however, that the IMFC is not a forum to resolve geopolitical and security issues which are discussed in other fora. 

By Mohammed Aljadaan, Minister for Finance of Saudi Arabia

IMFC members agreed on the following text:

Securing a soft landing and breaking from the current low growth-high debt path are the policy priorities for the global economy. We welcome the IMF’s efforts to enhance its surveillance, lending toolkit, and capacity development, and become more representative. Looking ahead, we remain committed to multilateral cooperation to promote global prosperity and address shared challenges. 

1. The global economy has moved closer to a soft landing. Economic activity has proven resilient, with global growth steady and inflation continuing to moderate. However, this masks important divergences across countries. Uncertainty remains significant and some downside risks have increased. Ongoing wars and conflicts continue to impose a heavy burden on the global economy. Medium-term growth prospects remain weak, and global public debt has reached record highs.

2. We will work to further secure a soft landing while stepping up our reform efforts to shift away from a low growth-high debt path and address other medium-term challenges. Fiscal policy should pivot toward consolidation, where needed, to ensure debt sustainability and rebuild buffers. Consolidation should be underpinned by credible medium-term plans and institutional frameworks while protecting the vulnerable and supporting growth-enhancing public and private investments. Monetary policy must ensure inflation returns durably to target, consistent with central bank mandates, remain data-dependent, and be well communicated. Financial sector authorities should continue to closely monitor risks in banks and non-banks, including from property markets. We will continue to enhance financial regulation and supervision, including via timely finalization and implementation of internationally agreed reforms, and harness the benefits of financial and technological innovation, while mitigating the risks. We will pursue well-calibrated and sequenced growth-enhancing structural reforms to ease binding constraints to economic activity, boost productivity, increase labor market participation, promote social cohesion, and support the climate and digital transitions.

3. We remain committed to international cooperation to improve the resilience of the global economy and build prosperity, while ensuring the smooth functioning of the international monetary system. We reiterate our commitments on exchange rates, addressing excessive global imbalances, and our statement on the rules-based multilateral trading system, as made in April 2021, and reaffirm our commitment to avoid protectionist measures.

4. We will continue to support countries as they undertake reforms and address debt vulnerabilities and liquidity challenges. We welcome the progress made on debt treatments under the G20 Common Framework (CF) and beyond. We remain committed to addressing global debt vulnerabilities in an effective, comprehensive, and systematic manner, including stepping up the CF’s implementation in a predictable, timely, orderly, and coordinated manner, and enhancing debt transparency. We look forward to further work at the Global Sovereign Debt Roundtable on ways to address debt vulnerabilities and restructuring challenges. We encourage the IMF and the World Bank to develop further their proposal to support countries with sustainable debt but experiencing liquidity challenges.

5. We welcome the policy priorities set out in the managing director’s Global Policy Agenda, and welcome the start of Kristalina Georgieva’s second five-year term as managing director.

6. We support the IMF’s surveillance focus on country-tailored advice to help members assess risks, bolster policy and institutional frameworks, and calibrate macrofinancial and macrostructural policies to enhance resilience, ensure debt sustainability, and boost inclusive and sustainable growth. We look forward to the Comprehensive Surveillance Review that will set future surveillance priorities.

7. We welcome the recent reforms to the lending toolkit. We welcome the completion of the review of PRGT facilities and financing that aims to bolster the IMF’s capacity to support low-income countries in addressing their balance of payments needs, mindful of their vulnerabilities, while restoring the self-sustainability of the Trust. We welcome the Review of Charges and the Surcharge Policy, which will alleviate the financial cost of Fund lending for borrowing countries, while preserving their intended incentives and safeguarding the Fund’s financial soundness. We welcome the enhanced cooperation with the World Bank on climate action, and with the World Bank and the World Health Organization on pandemic preparedness, which will further enhance the effectiveness of IMF support through the Resilience and Sustainability Trust (RST). We look forward to the Review of the GRA Access Limits, the Review of Program Design and Conditionality, the Review of the Short-term Liquidity Line, and the comprehensive Review of the RST. We continue to invite countries to explore voluntary channeling of SDRs, including through MDBs, where legally possible, while preserving their reserve asset status.

8. We support the IMF’s efforts to strengthen capacity development and to secure appropriate financing. We welcome the ongoing work with the World Bank on the Domestic Resource Mobilization Initiative.

9. We reaffirm our commitment to a strong, quota-based, and adequately resourced IMF at the center of the global financial safety net. We have secured, or are working to secure, domestic approvals for our consent to the quota increase under the 16^th General Review of Quotas (GRQ) by mid-November this year, as well as relevant adjustments under the New Arrangements to Borrow (NAB). As a safeguard to preserve the Fund’s lending capacity in case of a delay in securing timely consent to the quota increase, creditors for Bilateral Borrowing Agreements are working to secure approvals for transitional arrangements for maintaining IMF access to bilateral borrowing. We acknowledge the urgency and importance of realignment in quota shares to better reflect members’ relative positions in the world economy, while protecting the quota shares of the poorest members. We welcome the executive board’s ongoing work to develop by June 2025 possible approaches as a guide for further quota realignment, including through a new quota formula, under the 17^th.

10. We welcome the new 25^th chair on the executive board for Sub-Saharan Africa, strengthening the voice and representation of the region. We also welcome Liechtenstein as a new member. We appreciate staff’s high-quality work and dedication to support the membership. We encourage further efforts to improve staff diversity and inclusion. We reiterate our commitment to strengthen gender diversity at the executive board and will continue to work to achieve the voluntary objectives to increase the number of women in board leadership positions.

11. We reiterate our strong commitment to the Fund on its 80^th anniversary and look forward to further discussing at our next meeting ways to ensure the Fund remains well-equipped to meet future challenges, in line with its mandate, and in collaboration with partners and other IFIs. We ask our deputies to prepare for this discussion.

12. Our next meeting is expected to be held in April 2025.

IMF Communications Department