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China's proactive fiscal policy to continue

(China Daily)
Updated: 2009-10-08 08:54

From left: IMF Managing Director Dominique Strauss-Kahn, Egyptian Finance Minister Youssef Boutros-Ghali, Egyptian Minister of Investment Mahmoud Mohieldin and World Bank President Robert Zoellick shake hands after signing papers for Egypt to host the next overseas IMF/World Bank Meetings in 2012, at the Istanbul Congress Center in Istanbul, Turkey on Tuesday. [Agencies]

ISTANBUL: China will continue to implement its proactive fiscal policy and moderately ease the monetary policy to help the still precarious world economy, Finance Minister Xie Xuren said at the conclusion of the annual meetings between the International Monetary Fund (IMF) and the World Bank yesterday.

Xie also urged the IMF and the World Bank to speed up reforms that would give developing countries a louder voice to reflect the changing economic weight of their members.

The Group of 20 leaders proposed in a summit last month to increase developing countries' voting power and quota in the IMF and the World Bank by at least 5 percent and 3 percent respectively.

Xie said the IMF should speed up its quota reform and complete its 14th General Quota Review before January 2011 to realize a significant transfer of quota and voting power to emerging markets and developing countries.

He also urged the IMF to set up an automatic adjustment mechanism for its quota in the mid- and long-term to timely reflect the evolving weight of each member in the global economy.

China also expects the World Bank to reform toward the ultimate goal of parity voting power between developed and developing members as early as possible, he said.

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In its latest World Economic Outlook (WEO), the IMF predicted that the global economy would grow by 3.1 percent in 2010, 0.6 percent higher than its prediction in July, saying the global recession "was ending".

Global financial stability has also improved following unprecedented policy actions and signs of economic recovery, the IMF said in the Global Financial Stability Report.

The IMF lowered its estimate of losses from the global financial and economic crisis to $3.4 trillion, around $600 billion lower than its last report in April, largely due to rising securities values, the report said.

Asia is leading the world economy out of the crisis, Anoop Singh, director of the IMF's Asia and Pacific Department, told reporters.

The latest WEO projected that Asia will grow 2.8 percent this year and 5.8 percent in 2010, which is far better than other regions in the world.

The advanced economies are also expected to walk out the negative territory and achieve slight growth next year. The projection of economic growth in 2010 for the US stood at 1.3 percent, and the euro zone as a whole at 0.3 percent.

Despite the bright outlook, the World Bank and the IMF at the same time expressed some cautions towards their prediction of the world economic growth.

World Bank President Robert Zoellick said the year 2010 would be "a highly uncertain economic year" when much of the stimulus action will run out.

In tackling the risks and uncertainties in current world economy, the IMF suggested in its WEO that the key policy priorities should remain to restore the health of the financial sector and to maintain supportive macroeconomic policies until the recovery is on a firm footing.

He also called for pressing ahead with the voting reform at the World Bank and the IMF, saying a multi-polar economy which is less reliant on the United States will be a more stable world economy.

Xinhua-Reuters