Unlocking IMF: 2018 World Bank Annual Meetings in Bali, Indonesia

Countries should brace for risks amid heightened trade tensions and on going geopolitical concerns noting tighter financial conditions

The 2018 International Monetary Fund (IMF) and World Bank Annual Meetings in Bali, Indonesia, were held from October 8th–14th . More than 36,000 participants attended the meetings, which far exceeded the organizing committee’s estimation of 19,000 before the event.

The IMF downgraded its global growth outlook to a still robust 3.7% from the 3.9% projected in April. The adjustment was a result of an upswing in economic risks due to rising trade tensions and debt levels. The revised estimates included a worsening outlook for developing economies this year and in 2019, compared with the IMF’s quarterly World Economic Outlook in July, as well as downgrades for the United States and China in 2019.

The IMF warned that risks highlighted in previous reports “have become more pronounced or have partially materialized” in the real world.

Speaking before the world’s finance ministers and central bankers at the plenary session, Indonesian President Joko Widodo set the tone in his opening speech as he warned, “winter is coming,” and urged countries to unite and cooperate rather that compete, and address mounting issues from climate change to technology disruption.

He made comparisons of the current global economic situation to the Game of Thrones, an Emmy-winning television series produced by HBO and adapted from a series of novels by George RR Martin. “With all the problems that the global economy current face, it is appropriate to say that ‘winter is coming’,” said Jokowi, borrowing one of the oft-quoted phrases in the series. It earned applause from the audience.

On Thursday, October 11, 2018, the IMF and World Bank Executive Board endorsed and launched the Bali Fintech Agenda, which outlines 12 principles established to help member countries harness the benefits and opportunities of rapid advances in financial technology (fintech), while at the same time also managing risks that arise.

The 12 policy elements in the Bali Fintech Agenda are follows:

1. Embrace the promise of fintech;

2. Enable new technologies to enhance financial service provision;

3. Reinforce competition and commitment to open, free and contestable markets;

4. Foster fintech to promote financial inclusion and develop financial markets;

5. Monitor developments closely to deepen understanding of evolving financial systems;

6. Adapt regulatory framework and supervisory practices for orderly development and stability of the financial system;

7. Safeguard the integrity of financial systems;

8. Modernize legal frameworks to provide an enabling legal landscape;

9. Ensure the stability of domestic monetary and financial systems;

10. Develop robust financial and data infrastructure to sustain fintech benefits;

11. Encourage international cooperation and information-sharing, and;

12. Enhance collective surveillance of the international monetary and financial system.

The 2018 IMF and World Bank Annual Meetings in Bali concluded on October 14 with global financial leaders warning of complacency over global growth and calling on countries to brace for risks amid heightened trade tensions on going geopolitical concerns, noting that tighter financial conditions — particularly affecting many emerging markets.

Following a plenary meeting between the two institutions, the International Monetary and Financial Committee (IMFC), issued a communique with an agreed set of guiding principles for the 189 member countries. The document said that global expansion remains strong, but there is an uneven recovery, narrowing the window of opportunity to protect expansion and mitigate risks.

Included in the communique is a call to refrain from competitive currency devaluations or targeting exchange rate for competitive purposes. Governments were urged to step up dialogue and actions to tackle shared challenges in international trade, including ways to reform the World Trade Organization.

The IMFC also urged countries to produce fiscal policies that would rebuild buffers ensuring debt remains under control and called on central banks to maintain monetary accommodation to control inflation.

IMF Managing Director Christine Lagarde remained upbeat over the global outlook but noted that growth has plateaued and called for enhanced cooperation for the benefit of all. “Sail together and we will be stronger, focus on your policies. Don’t drift and let’s cooperate as much as we can because we will be better off together,” Lagarde said.

One theme repeatedly mentioned by the two institutions is that there are vulnerabilities in emerging markets, and thus, some countries that are more vulnerable than others. With that, companies and businesspeople may want to take into consideration the external factors and how policy makers react to them when they make business decisions in different markets where they operate.

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Edited by Helen McCarthy