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3/19/2020

IMFC Statement of U.S. Treasury Secretary Steven T. Mnuchin | U.S. Department of the Treasury

IMFC Statement of U.S. Treasury Secretary Steven T. Mnuchin
October 18, 2019

Washington, D.C. – U.S. Treasury Secretary Steven T. Mnuchin issued the following statement at

the Annual Meetings of the International Monetary Fund and World Bank:
I welcome the opportunity to discuss with my counterparts the challenges facing the global
economy. Recent signs of weakness in parts of the global economy underscore the need for
countries to use all tools at their disposal to reignite growth. With space for monetary easing
diminishing in many countries, fiscal policy paired with pro-growth structural reforms that will
durably raise investment, job creation, and productivity will need to play a larger role. The IMF
can support global growth by remaining focused on its core mission and delivering sound policy
advice that will help countries advance necessary reforms.
Despite slowing global growth, the U.S. economy remains strong. In July, the United States
marked its longest expansion in recorded history. The Administration’s policies of regulatory
reform and corporate tax reform have succeeded in lowering barriers to investment, thereby
priming the economy for faster growth. American households have also experienced continued
labor market strength and the highest sustained wage growth in a decade, both of which we
expect will support strong consumption spending and the stabilization of residential
investment.
We are preparing a foundation for future growth through fairer trade deals. To this end, the
United States is working with other countries on agreements for free and fair trade, and the
United States-Mexico-Canada Agreement (USMCA) is a major success in achieving that goal. The
United States and Japan also recently reached agreement on an early outcome from
negotiations on market access for agriculture and industrial goods, as well as an agreement on
digital trade. Negotiations last week between the United States and China resulted in
substantial progress on phase one of a trade deal between the two countries, which would
address intellectual property protection, financial services, structural issues regarding
agriculture, currency and foreign exchange, important aspects of forced technology transfer,
and dispute resolution.

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IMFC Statement of U.S. Treasury Secretary Steven T. Mnuchin | U.S. Department of the Treasury

Outside of the United States, the current slowdown in growth among key economies,
particularly China, Germany, and other parts of Europe, could prove longer or deeper than
initially envisioned in the absence of policy action to raise actual and potential growth. Major
economies need to take action to durably strengthen investment, job creation and domestic
demand. With weakened growth in many economies where sovereign borrowing costs are at
historically low levels, there is ample space for tax cuts and other fiscal measures that would
support near-term activity and medium-term growth prospects. These measures should be
paired with continued e orts to address vulnerabilities from elevated leverage and with
structural reforms that will boost private sector-led growth. Many countries continue to lean
heavily on monetary policy; more proactive support from fiscal policy and structural reforms
would help reignite stronger and more sustainable global growth.
Global trade and current account imbalances have been broadly unchanged in recent years, and
their high degree of persistence across major economies is contributing to the build-up of future
risks. Moreover, weak demand and subdued real interest rates across the global economy are
symptoms of the substantial excess saving that is not being productively employed within the
domestic economies of China, Germany, the Netherlands and other major economies. To
achieve stronger and more sustainable global growth – particularly at a juncture when global
activity is flagging – countries that have maintained large and persistent external surpluses
must pursue reforms that will revitalize domestically-driven growth.
An adequately-resourced IMF plays a valuable role in promoting international economic and
financial stability and growth. With this in mind, we continue to support e orts to maintain the
IMF’s current resources so that the IMF is su iciently equipped to respond to potential crises
over the medium term. We welcome the work underway to reach agreement on a broad
package of IMF resources, including closure of the 15th General Review of Quotas and a
proposal to double the New Arrangements to Borrow (NAB).
Central to any review of IMF resources, and key to the IMF’s future as an institution, is the trust
we have in the IMF’s commitment to budget restraint and institutional e iciency. The IMF’s
yearlong e ort to closely examine its current compensation and benefits system is an important
and necessary endeavor. As we head towards the conclusion of the review, we urge members to
approve a robust set of proposals aimed at streamlining overall costs, modernizing salaries and
benefits, restoring dynamism in the workforce, and increasing e iciency. These reforms are
critical to enhance the ability of the IMF to better recruit, reward, and retain qualified sta and
support the needs of today’s working families. As a public institution, the IMF needs to lead by
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IMFC Statement of U.S. Treasury Secretary Steven T. Mnuchin | U.S. Department of the Treasury

example on these issues. Many of the reforms under consideration have already been taken by
other international financial institutions and by IMF members.
Addressing debt transparency and sustainability continues to rank as a top issue facing the
global economy and, in particular, low-income countries. Today, nearly half of all low-income
countries are at high risk of debt distress or are in debt distress, o en due to non-concessional,
low-quality, and non-transparent arrangements from emerging creditors. The IMF can play a
leading role in supporting government e orts to address these risks to debt sustainability. For
example, IMF programs in Angola and Ecuador support government reforms that will improve
public financial management and promote debt transparency. We strongly support the IMF and
World Bank’s multi-pronged agenda, and we must work to build further momentum on reforms
underway to enhance debt transparency and sustainability. Full publication of debt data must
become the standard for member countries to promote better governance and accountability,
which in turn will help to bolster investor confidence. The IMF should also continue to support
countries with capacity limitations to move toward this standard of full debt transparency and
to develop sound debt management frameworks. We should also leverage upcoming IMF policy
reviews on the debt sustainability analysis of market access countries, provision of data for
surveillance, and Special Data Dissemination Standards to broaden our definitions of public
debt, increase transparency and promote greater debt sustainability.
The IMF should continue to take steps to strengthen its execution of its core mandate. The
recent Review of Conditionality found that lasting program success depends not just on
resolving balance of payments programs but also on achieving external viability and fostering
economic growth. We look forward to implementation of the review’s recommendations
through clear and specific guidelines for sta . The upcoming Comprehensive Surveillance
Review provides an opportunity to reexamine the IMF’s execution of its core areas of
surveillance – exchange rates, fiscal, monetary, and financial sector policies – and identify ways
in which the IMF can more e ectively fulfill its mandate.
The complexity of the work the IMF does and the systems it uses to do the work has increased
dramatically, and the IMF needs an updated approach to confront risks stemming from this
complexity. It is imperative that the IMF modernize the organizational structure of its risk
management and align itself with best practices. To mitigate these risks, the IMF should move
towards a more independent, centralized risk management unit led by a fully empowered chief
risk o icer who can present a comprehensive and up-to-date view of overall enterprise risk.

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IMFC Statement of U.S. Treasury Secretary Steven T. Mnuchin | U.S. Department of the Treasury

An adequately-resourced and e icient IMF that is focused on its core mission is critical to
boosting long-term sustainable global growth. We look forward to working with the IMF and
other members on reforms and a broad resource package that will enable the IMF to maintain
its status as a leading economic and financial institution.
Finally, I want to thank Madame Lagarde for her many years of service as Managing Director of
the IMF. It has been a pleasure working with her, and I look forward to continuing our close
relationship in her new role at the European Central Bank. She has steered the IMF through
ebbs and flows in the global economy, and the European Central Bank will be in good hands as
it faces challenges both new and old going forward. I would also like to welcome Dr. Kristalina
Georgieva in her new role as Managing Director. We look forward to working with her in the
same spirit of close cooperation as we did when she was Chief Executive O icer of the World
Bank.
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