Further action urged by IMF, WB

COUNTRIES must act decisively to help nurture the global economy’s fragile recovery, finance ministers and central bankers said at the conclusion of the International Monetary Fund and World Bank (IMF-WB) spring meetings.

“Policy actions have defused key short-term risks. An uneven recovery is emerging but growth and job creation are still too weak. New risks are arising while several old risks remain,” they said in a joint communique released yesterday.

Emerging markets should recalibrate their policies as economic activity picks up, they added. Policy support implemented as the global crisis hit should be unwound as a recovery starts to take root, the IMF-WB said, and buffers must be rebuilt to guard against new volatility.

To ensure financial stability, the IMF said emerging markets could turn to macroprudential measures and, “as appropriate,” capital controls. “Such measures should not, however, substitute for warranted macroeconomic adjustment,” it added.

All of the moves of the Bangko Sentral ng Pilipinas (BSP) have so far been limited to macroprudential measures — a tack validated by the IMF. The central bank has maintained that capital controls are measures of last resort.

The IMF-WB, meanwhile, also commended efforts by developed countries to lift their economies out of the rut. The United States could see moderate recovery this year, it said, led by the private sector, while Japan has moved to combat deflation.