In the meetings of the International Monetary and Financial Committee (IMFC), finance ministers and central bank governors will discuss the global economic outlook. The IMF anticipates a shrinkage in global economic activity in 2009 and only a slight recovery in 2010. This amounts to the most severe economic downturn since the 1930s. Growth in the current year will be negative throughout the advanced economies. The projected medium-term improvement will depend on various factors, including progress in financial sector restructuring processes, the impact of the considerable economic stimulus measures, and on an only gradual rise in commodity prices in 2010.
Due to the extent of the global economic crisis, the IMF's resources could prove to be insufficient to provide the necessary support to its member countries. The IMFC will therefore discuss a substantial increase in the IMF's resources. Based on the decision of the Federal Council of 8 April 2009, Switzerland will inform the IMF of its intent to provide a short-term credit line of up to USD 10 billion, a decision that is subject to parliamentary approval. The longer term contribution to the resources of the IMF will be determined in the context of upcoming negotiations on extending and increasing the New Arrangements to Borrow.
The Development Committee will deal with the impact of the crisis on poor countries and the role of the international financial institutions in mitigating the effects of the downturn. Progress achieved in combating poverty and in implementing the Millennium Development Goals needs to be maintained. In line with this, the World Bank will triple its commitment over the next three years to approximately USD 100 billion. The corresponding resources will be focussed on three main areas: support measures for the most vulnerable segments of the population, and promoting the private sector and infrastructure projects. Furthermore the Development Committee will deal with the current governance reforms in the World Bank.
Switzerland broadly supports the significant and targeted commitment of the World Bank in combating the crisis and the more flexible use of resources. At the same, it underscores the fact that increased resources and rapid action should not be to the detriment of quality. The measures to combat the crisis must satisfy the high standards of the World Bank, not only from a procedural point of view, but also in terms of effectiveness, efficiency, sustainability and equal treatment. In conclusion, Switzerland in principle supports those governance reforms, which should contribute to strengthening the legitimacy of the World Bank and should make the institution more efficient and more effective.
Address for enquiries:
Paul Inderbinen, Head of the International Monetary Fund
and International Finance Division, tel. 031 322 61 66
Raymund Furrer, Head of the Division for Multilateral Financial Institutions, State Secretariat for Economic Affairs (SECO), tel. 031 324 08 19
Olivier Chave, Head of the Division for International Financial Institutions, Swiss Agency for Development and Cooperation, tel. 031 322 86 09