Fit for Purpose—Adapting IMF Advice to a New Economic Landscape

The International Monetary Fund is responding to the policy challenges of a fast-changing global economy still reeling from the COVID-19 crisis: it is modernizing the way it provides its regular policy advice to member countries—a process known as surveillance.

The regular health check of members’ economies, known as the Article IV consultations, will continue to cover fiscal, monetary, exchange rate and financial issues, which are at the heart of the Fund’s work.

 In the future, we will systematically integrate issues that have substantial macroeconomic impact such as inequality, climate change, and digital technology, so as to better deliver on our surveillance mandate.

The tailored and targeted policy advice to countries will also help policymakers better prepare for a transforming economic landscape.

A fast-changing world with challenges, new and old

The COVID-19 pandemic is a watershed moment in the still-young 21st century. The pandemic exposed new risks and spillovers, and significant uncertainties about the recovery.

The prospect of transformational change existed even before the pandemic. The world is becoming more interconnected, trends in digitalization and inequality are accelerating, and addressing climate change is now a key priority.

On top of this, policymakers must now also navigate the COVID-19 crisis. First and foremost, by saving lives and livelihoods, then ensuring a sustainable recovery and avoiding economic scarring.

To do this, they must confront questions for which there are often no easy answers including: how should policies be calibrated to maintain adequate support while ensuring stability and sustained growth? How should policymakers respond when facing scant room for maneuver because macroeconomic tools have already been extensively used in the Global Financial Crisis? How can asynchronous and divergent economic recoveries be managed so that those still grappling with the pandemic avoid falling further behind?

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