Meeting Global Economic Challenge (Part-I)

Article Submitted By Dr. Zia-Ur-Rehman | 28-Jul-2012 | Views: 809

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I am very pleased to have the chance to talk to you today. I'd like to focus mostly today on some of the economic challenges facing European countries. But I also want to link what I have to say on Europe to a broader issue—the importance of multilateralism in economic policies. Let me begin by drawing to your attention three events that took place at the end of last year, events which may seem unrelated but which were significant in themselves, and also significant for what they symbolize about international cooperation. The first event was the accession of Bulgaria and Romania to the European Union. It would have been unimaginable 20 years ago. It marks a great achievement for the citizens of Bulgaria and Romania and also a great achievement for the European Union, the latest stage in a remarkable unification of Europe. The second event was the announcement by the Philippines that it intended to repay early loans from the International Monetary Fund, the organization that I head, contracted during 1994-98.

The Philippines' ability to make this repayment reflects an impressive reform effort. It follows early repayments by Korea, Thailand, and Indonesia, and is the final repayment of loans contracted by Asian emerging markets during the Asian crisis of a decade ago. The significance of the third event is mostly symbolic. On December 29, the United Kingdom repaid the final instalment of loans from the United States and Canada contracted in 1945, to finance the reconstruction of Britain after the Second World War. The loans were the precursor of the Marshall Plan. This was one of the elements, along with the United Nations and the Breton Woods agreement that created the IMF and the World Bank, of a new approach to international relations. That new approach has brought both European countries and other countries around the world 60 years of economic development and prosperity. These three events bring to mind three thoughts.

First, Europe has reached another milestone. But its journey is far from complete. I will not explore today Europe's political options in the years ahead, but I do want to talk about its economic options, what European countries can do to ensure that they continue to advance in development and prosperity. Second, the International Monetary Fund faces a changed world. Indeed, we have known this for some time, and we are adapting to it. We are now in a world where large-scale economic crises are, for the moment, in the past. As a public institution, providing public goods, our greatest efforts must be made in identifying the problems that could lead to future crises and in persuading our members to adopt policies that will prevent them. Finally, the repayment of those long-ago loans to Britain should remind us of how much the world owes to the spirit of multilateralism and how important it is to rekindle that spirit today. Europe and the International Monetary Fund can both contribute to such a rekindling, and they can help each other. Let me now elaborate on these thoughts, beginning with the economic challenges facing Europe.

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