(From Press TV and The Economist)
Managing director of International Monetary Fund (IMF) says the economic reforms carried out by the Iranian government in recent years, especially the Subsidy Reform Plan, have been positive and constructive.
In a meeting with Governor of the Central Bank of Iran Mahmoud Bahmani on the sidelines of semiannual meetings of the International Monetary Fund and the World Bank in Washington, Christine Lagarde expressed hope that Western sanctions against Iran's central bank would be lifted.
Lagarde also indicated her concern about the fluctuations in global oil prices and their impact on the world economic growth, Fars News Agency reported on Sunday.
Bahmani, for his part, pointed to the most important economic developments resulting from fluctuation in oil prices which have affected oil consumer countries.
He also discussed the implementation of the Subsidy Reforms Plan in Iran, value-added tax, structural reforms in the banking system, and the impact of oil price fluctuations on global economy with Lagarde.
Bahmani said Iran, as a founding member of both the IMF and World Bank, has had good financial and monetary relations with these international bodies and expects IMF to continue its support for all member states, especially founding members. Bahmani also pointed to the destructive impact of Iran oil sanctions on the world economy and explained its effect on global economic growth and inflation, especially in view of the ongoing financial crisis in Europe.
http://www.presstv.ir/detail/237550.html
A bigger IMF war chest
(The Economist)
GIVEN the dismal weather reports from much of the world economy, and most notably the euro zone, the International Monetary Fund's stock of provisions has been looking a little thin. Yet it has not been easy to imagine a straightforward way to increase the funds available to the IMF. The rich countries that are typically the source of most of the Fund's resources are either racked by crisis, nervous about becoming racked by crisis at some not-too-distant future date, or in the midst of election season at a time when bail-out cash for profligate foreigners is not a very popular campaign pledge. Those that are a bit more fiscally hale, mostly emerging markets, are both much poorer than the euro countries at the heart of current crises (and therefore rightly miffed at the expectation that they should be the ones to come to the rescue) and unwilling to pour money into an important international organisation at which their voices remain relatively small.
Despite these challenges, IMF Managing Director Christine Lagarde managed to scrape together pledges for $430 billion in new funding for the organisation, which she announced at the spring meetings of the World Bank and IMF over the weekend in Washington. The new money includes secured commitments of more than $350 billion from mostly rich countries, alongside unspecified pledges from large emerging markets like Brazil, China, and India. America and Canada declined to chip in. Ms Lagarde estimates that the IMF now has close to $1 trillion in lending capacity.
Will it help? Given the many financial vulnerabilities across the world economy, a larger pot of IMF resources is no bad thing. It is difficult to feel too positively about this development, however. For one thing, it won't be easy to deploy the funds in support of Europe. A programme for Spain, for example, will only be negotiated by the so-called troika—the European Commission and the European Central Bank will be acting alongside the IMF. That's sure to be a difficult and painful process, and one which will only be initiated after clear deterioration in conditions in euro-zone markets. Moreover, it will be impossible to read euro-zone aid from the IMF as anything other than a significant failure on the part of euro-zone officials. Annie Lowrey of the New York Times writes:
Canada, for instance, declined to contribute new money to the fund, arguing that Europe had more than enough money to handle its own sovereign debt crisis. “They need to step up to the plate and overwhelm this issue with their own resources,” Jim Flaherty, the Canadian finance minister, told reporters.
That's absolutely right. It's right on purely fiscal terms. Taken as a whole, the debt load of the euro zone as a share of GDP isn't particularly high by rich world standards. And that scarcely matters since the ECB can create euros at will. It's telling that Japan's sizable contribution to Ms Lagarde's fund drive makes it the IMF's largest benefactor. Japan's debt-to-GDP ratio is miles worse than any country around the euro-zone periphery, and its bond yields are just a shade above zero. The euro zone's big problem—and, by extension, the world's big problem—is not a dearth of resources, at the IMF or anywhere else. Or not of financial resources at any rate.
What the euro zone lacks is the institutional wherewithal to break a deadly paralysis. Its key institutions are stuck. The ECB is stuck battling the illusory spectre of runaway inflation while growth fails. Finance ministers are stuck arguing for austerity everywhere all the time, even as it is clear that large-scale budget cuts are proving counterproductive. And key leaders, including Angela Merkel, are stuck resisting real debt mutualisation—eurobonds—that would break the link between local bank pressures and crumbling sovereign creditworthiness. There is little the world outside Europe can do to fix this mess. Indeed, apart from the funding pledge, the spring meetings broke up without much agreement on what to do about the euro zone. It's good to have help at hand given the decent odds that further euro-zone bail-outs will be necessary. It would be so much better to agree the measures that would prevent a slide into such bail-outs in the first place.
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Sanctions Against Iran
Should the IMF and the World Bank be giving subsidies to Iran, if sovereign nations of the UN have sanctions against them?
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