China, the Euro Area, Japan, Saudi Arabia, and the United States have agreed to participate in the IMF’s first multilateral consultation. The exercise will focus, in a comprehensive and collective way, on how to address global imbalances while maintaining robust global growth. Welcoming the step, IMF Managing Director Rodrigo de Rato noted that the cooperative action of the participants “can play a major role in the orderly unwinding of these imbalances and in sustaining global growth as savings, consumption, and investment patterns adjust.”
Multilateral consultations—an initiative de Rato proposed in April as part of the Fund’s medium-term strategy—form part of the Fund’s multilateral surveillance responsibilities and are designed to complement the organization’s regular Article IV consultations with individual member countries. They will provide a forum for debate, with each consultation focusing on a specific international economic or financial issue and directly involving the countries party to that issue.
The consultations are meant to strengthen the IMF’s analysis of the potential benefits of collective action. They will aim to enable the Fund and its members to agree on policy actions and help policymakers show that the measures they propose will be matched by their counterparts in other countries to the benefit of all.
The first consultation, involving these systemically important members and group of members, will focus on spillovers and linkages among these and other economies, rather than on domestic economic issues. The IMF announced that staff contacts for the first consultation would begin soon. These are expected to be followed by meetings of Fund management and staff with representatives from all participating countries and economies. The outcome of the consultation, which should be completed by the end of 2006, will be discussed by the IMF’s Executive Board and, ultimately, by the International Monetary and Financial Committee, the primary advisory committee of the Fund’s Governors.