IMF asks G20 to prepare global economic stimulus

Washington, Feb. 25: The Group of 20 ( G20) nations must plan now for a coordinated stimulus programme to keep a slowing global economy from stalling, International Monetary Fund (IMF) staff said in a report on Wednesday.

The report was prepared for senior G20 officials who are meeting in Shanghai later this week amid falling equity markets, volatile currencies and signs of economic weakness throughout the world.

“The G20 must plan now for coordinated demand support using available fiscal space to boost public investment,” IMF staff said in the report.

The Shanghai meeting is already being compared to the G20 meeting in April 2009 when officials agreed on coordinated stimulus to prevent a worldwide depression during the global financial crisis.

US treasury secretary Jack Lew downplayed expectations of a G20 emergency plan this week, telling Bloomberg Television that some world economies were doing better than thought and that investors should not “expect a crisis response in a non-crisis environment.”

But the IMF staff said global economic growth was slowing and financial conditions were tightening for emerging economies, where commodity exporters have been hard hit by an economic slowdown in China.

Governments may need to create new financing mechanisms to help some emerging market and commodity exporting countries that are highly vulnerable to reversals in the flows of money, the IMF staff said.