Global economy needs 21st century policies – IMF boss

According to the World Bank, 40 percent of the land now used to grow maize in sub-Saharan Africa will no longer be able to support that crop by the 2030s, with drastic implications for the economy, food security and peoples’ lives, said Managing Director, International Monetary Fund (IMF), Christine Lagarde.

She was speaking on 'The Triple Challenge Facing the Global Economy' at the High-Level Forum on Sustainable Development at the United Nations, New York on Tuesday.

Christine Lagarde

Excerpts of her speech:

“We are here today for one reason and one reason only – to agree on the actions we must take as a global community to support global sustainable development. We need 21st century policies for a 21st century global economy, which means thinking more creatively, more cohesively, and more collaboratively than in the past.

“Why? Because our planet faces a triple challenge: from economic instability, from environmental damage, and from insufficient equity. We cannot view these in isolation. Each feeds on and magnifies the other. So we must tackle them together. How? Three priorities: (i) get the economic foundations right; (ii) get the pricing for a green economy right; (iii) get equity right.

Economic foundations

“We know that without the basics, the race is over at the starting gun. Sustainable development starts with macroeconomic stability. Exactly five years ago, the collapse of Lehman Brothers sent the global economy into a tailspin, the like of which had not been seen in half a century. Slowly but surely, we are on the road back, but we are not there yet.

Finishing the job means taking action across the spectrum of policies: using monetary and fiscal policies to navigate recovery, reforming the financial sector, and breaking down barriers to further growth and job creation - especially for young people.

Working with all of our partners, the IMF is committed to this agenda. More than this, together with our 188 member countries, we are working to implement it.

“We need to get growth going again – but on an even better track than in the past. We know that the wrong kind of economic growth can hurt the environment, and that environmental degradation can hurt the economy. Make no mistake: it is the poorest countries that will be hit soonest and hardest.

“According to our friends at the World Bank, 40 percent of the land now used to grow maize in sub-Saharan Africa will no longer be able to support that crop by the 2030s, with drastic implications for the economy, food security and peoples’ lives. So we must make sure that the harm we do is reflected in the prices we pay.

“The IMF is not an environmental organisation, but we can help here. How? One example is by trying to shine a light on the murky cobweb of energy subsidies. These are enormous in scale, and they help the people who need them least. These subsidies, including tax subsidies, ate up almost $2 trillion in 2011---a whopping 2½ percent of global GDP that could have been used more wisely. Taking action on this issue alone, energy subsidies, would be good for the budget, good for the economy, and good for the planet.

Equitable

“For too long, economists looked at growth alone, but not its distribution. We are now more keenly aware – based partly on IMF research – that a more balanced distribution of income leads to more sustained growth and greater economic stability.

The key is greater inclusion in economic life – so all can share in prosperity and fulfill their potential. As a matter of urgency, we must step up efforts to eliminate the scourge of extreme poverty from our midst. I fully support the goal of ending extreme poverty everywhere by 2030.

“Also, as a matter of urgency, we push for greater gender equity - in the classroom, in the workforce, and in the board room,” she said.