NEW YORK – This year, I didn’t attend the October annual meetings of the International Monetary Fund and the World Bank in Washington, DC. Instead, I paid close attention to reports of the gathering and talked to people who were there whom I respect. What emerged is depressing for the wellbeing of the global economy. In particular, the prospect of continued weakness and fragmentation pressures will compound the challenges to the credibility and effectiveness of multilateral institutions.
The convening power of the IMF and the World Bank is unquestionably strong, if not unique. Every year, their annual meetings attract top economic and financial officials from more than 180 countries, as well as a far larger number of private-sector representatives. It’s an exceptional global gathering, not only for officials to exchange views but also for corporate networking.
Over the last few years, the official meetings have increasingly been overshadowed by the ever-growing number of parallel events, notably diminishing the gathering’s contribution to better policymaking. In fact, this year, I couldn’t find a single person who had paid much attention to a key policy output of the meetings – the communiqués issued by the two institutions’ top policymaking committees.
This is in stark contrast to the past. I vividly remember the days, not so long ago, when officials prepared diligently for these policy discussions. Private-sector participants would eagerly await their outcome in the hope of gaining a better understanding of the global economic outlook and the prospects for key national and international policy initiatives. Markets were known to move on particular remarks, which is why officials would spend hours refining the communiqués, lest they be misinterpreted.
The charitable reading of this change is that the substance has shifted to the parallel events. Consider the IMF. The communiqué of the International Monetary and Financial Committee (IMFC), the Fund’s top member-country policymaking panel, is preceded by the release of two flagship IMF publications on economic and financial trends (respectively, the World Economic Outlook and the Global Financial Stability Report). These are supplemented by press conferences and speeches involving many Fund officials. The themes are then picked up in a host of seminars, as well as in presentations by national officials. As a result, many policy implications are covered well before the IMFC meets.
Yet, as much as I respect and admire the multilaterals, and I have done so for decades, I fear that this explanation is too partial. Yes, the IMF maintains an impressive analytical edge, owing to its talented and dedicated staff as well as its unique links to countries. Yes, it has made important strides in improving its understanding of the relationship between financial markets and the real economy. And, yes, it has bravely taken the lead in shining more light on the economic impact of gender inequality and climate change. But its forward-looking analyses have too often proved to be backward-looking, and its quantitative projections have consistently been subject to considerable revisions.
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