International Developments on

Monetary and Financial Cooperation

October 2013

contribute more than 90 percent of the

windfall profits from the sale of IMF gold
GLOBAL DEVELOPMENTS to the Poverty Reduction and Growth
Trust (PRGT) fund managed by the IMF.
The agreement is the culmination of a
International Monetary Fund (IMF) calls
multi-year effort to secure adequate
for new global agenda in light of new
resources for the PRGT. In 2009, the IMF
global transitions. Countries will need
Executive Board approved the sale of
to adopt strong national policies and
one-eighth of the IMF’s total holdings of
work together even more closely to
gold to support the Fund’s new income
manage new transitions underway in the
model. With the price of gold at near
global economy, according to IMF
record highs, about SDR2.45 billion
Managing Director Christine Lagarde.
(US$3.75 billion) of the unexpected
Ms. Lagarde identified these transitions
windfall gold profits was placed in the
as: one in the pattern of economic
IMF’s general reserve. The Board agreed
growth, and the other toward a different
that the windfall profits should be used
kind of financial sector. The IMF noted
for the benefit of the Fund’s low-income
that these transitions will likely play out
members, and that the distribution of
over the rest of the decade and will
profits could only take place after
require not only active national policy
members, accounting for at least
management, but also active
90 percent of the distribution, undertook
international policy collaboration. The
to make their shares available to the
immediate priority for emerging markets
PRGT. (10 October 2013, IMF website)
is to ride out the ongoing turbulence
brought about by uncertainties in the US
International Monetary and Financial
fiscal and monetary policy outcomes,
Committee (IMFC) communiqué notes
and adopt policy responses that would
continuing global recovery, welcomes
prevent stunting their growth
surveillance and governance reforms at
momentum including currency
the Fund. In a communiqué statement
depreciation, liquidity provision, and
released on 12 October 2013 during the
structural reforms. In managing the two
IMF-World Bank (WB) Annual Meetings
major transitions, the IMF emphasized
held in Washington D.C., the IMFC
that international collaboration is the
Meeting noted that global recovery is
only way forward as mutual help is the
continuing, although at a subdued pace
best form of self-help. (3 October 2013,
and with downside risks persisting. The
IMF website)
IMFC also reported that, although
growth has generally remained resilient
IMF secures concessional lending for
in low-income countries, there remains a
world’s poorest countries. The IMF has
need to build on recent progress and
secured funding for its concessional
implement more ambitious and
loans to the world’s poorest countries
coherent policies for strong, sustainable,
with its membership agreeing to
and balanced growth. The IMFC also
advised the Fund to continue providing a
forum to stimulate analysis and
multilateral dialogue that promotes
policy coherence and concerted action
to manage spillovers. It further
welcomed the IMF’s progress in
implementing its strengthened
surveillance framework, and called on it
to give its highest priority to governance
and quota reforms that would enhance
the Fund’s credibility, legitimacy and
effectiveness. (IMF website, 12 October
2013)
Financial Stability Board (FSB) Regional
Consultative Group for Asia holds fifth
meeting. The Financial Services Agency
(FSA) of Japan hosted the fifth meeting
of the FSB Regional Consultative Group
for Asia on 30 October 2013 in Tokyo,
Japan. Members of the group reviewed
the FSB’s policy priorities and work plan,
followed by a discussion of the shadow
banking system in Asia. Members
considered the FSB’s high-level policy
framework for strengthened oversight of
shadow banking relevant for the region.
They also noted the possibility of some
deleveraging and discussed policies that
could be implemented to mitigate its
impact. Members also discussed
vulnerabilities and regional financial
stability issues, including the potential
impact on Asia of a reduction in
quantitative easing programs underway
by a number of central banks.
(30 October 2013, FSB website)
European Union (EU) Council endorses
final compromise on Cohesion policy for
2014-2020. The Permanent
Representatives Committee of the EU
Council, composed of 28 EU
Ambassadors, endorsed on 29 October
2013 the final compromise on the EU
Cohesion policy package for 2014-2020.
The compromise covers issues
on macroeconomic conditionality,
performance reserve, pre- financing and
co-financing. The EU support for
cohesion policy amounts to €325.15
billion (US$440 billion) for the next
seven years, in line with the political
agreement on the EU's multi-annual
financial framework (MFF) for 2014-
2020. The Cohesion policy is an EU
investment policy, designed to reduce
disparities between the levels of
development of the EU's various regions
and member states by promoting
economic growth, job creation and
competitiveness. The cohesion policy is
also expected to contribute to the
achievement of the Europe 2020
strategic objectives of smart, sustainable
and inclusive growth. (29 October 2013,
EU News Room)
REGIONAL
2013 Asia Pacific-Economic Cooperation
DEVELOPMENTS
Asia Pacific Economic Cooperation
(APEC) Economic Leaders’ Week opens
in Bali, Indonesia. APEC Leaders and
Ministers gathered on 7-8 October 2013
in Bali, Indonesia to revitalize trade,
keep the global economy on a path to
recovery, create jobs and move the
region towards more balanced and
sustainable long-term growth. APEC
Leaders and Ministers focused
discussions on strengthening free trade
and investment in the region, addressing
growing inequities and environmental
challenges, and improving connectivity
to facilitate cross-border movement of
goods, people and capital. Leaders and
Ministers also assessed ongoing efforts
to lower trade barriers and the further
pursuit of the Bogor Goals for free trade
and investment in the region by 2020.
The APEC Leaders’ meeting also worked
on improving chances for a positive
outcome for the upcoming 9th World
Trade Organization (WTO) Ministerial
Conference also scheduled in Bali,
Indonesia in December 2013.
(2 October 2013, APEC website)
Page 2 of 4
ASEAN Leaders call for deeper economic challenges, Singh urged ASEAN and India
integration to build the ASEAN to sign an ASEAN-India Trade in Services
Economic Community (AEC). During the and Investment Agreement before the
23rd ASEAN Summit held on end of the year. India is also engaged in
9 October 2013 in Bali, Indonesia, negotiations on the RCEP with ASEAN
Leaders from the 10 ASEAN member that aims to create the world's largest
countries called on the regional bloc to free trade area encompassing the major
deepen economic integration to further Asian economies by 2015. (14 October
promote the AEC building process. 2013, ASEAN Affairs website)
Noting that 79.7 percent of the AEC
Asian Development Bank (ADB) voices
Blueprint has been implemented, the
concern over Trans-Pacific Partnership
Leaders said efforts must be intensified
(TPP) agreement. The ADB expressed
to enhance ASEAN’s competitiveness
concern over the "ambitious and wide-
and continue to deepen and broaden
ranging" agenda of the TPP, a proposed
economic integration so as to meet the
regional free trade agreement (FTA)
set targets in a timely manner. The
under negotiations between the United
Leaders also called for further
States, Japan and 10 other countries
investment liberalization and facilitation
namely Australia, Brunei, Chile, Canada,
in the region, highlighting areas of
Malaysia, Mexico, New Zealand, Peru,
cooperation such as non-tariff measures
Singapore and Vietnam. In its Asian
and services integration. They likewise
Economic Integration Monitor (AEM)
emphasized the need to further
publication, a semi-annual review of
integrate ASEAN into the global
Asia's regional economic cooperation
economy, especially through
and integration, the ADB expressed the
implementation of ASEAN+1 free trade
view that the year-end deadline for TPP
areas and negotiations for the Regional
to conclude the talks will likely be
Comprehensive Economic Partnership
missed. The report also casts doubt on
(RCEP), as well as preparations for the
the ASEAN’s RCEP with Australia, China,
ASEAN-Hong Kong Free Trade Area
India, Japan, South Korea and New
negotiations. ASEAN member countries
Zealand being completed by its target
also eyed to facilitate the movement of
date of 2015. The TPP and RCEP are two
ASEAN nationals, business persons and
major free trade agreements in the
tourists in the region. (10 October 2013,
offing which involve ASEAN or some
Xinhua news via ARIC)
ASEAN members. The report further
noted that while ASEAN has embarked
ASEAN-India strengthen ties, commit to
on a combination of multilateral and
increase bilateral trade. India has
unilateral measures to reduce barriers to
unveiled plans to open a separate
trade, goods and services and promote
diplomatic mission for ASEAN to deepen
investments, the proliferation of ASEAN
relations and push trade to
FTAs does not effectively address
US$100 billion by 2015. Indian Prime
regulatory barriers and other non-tariff
Minister Manmohan Singh made the
barriers (NTBs). These NTBs include
announcement at the 11th ASEAN-India
product standards, mutual recognition
Summit held on 10 October 2013 in
agreements on services and investment,
Indonesia. Addressing the Summit,
intellectual property rights, and
Prime Minister Singh emphasized that
government procurement rules -- which
India considers ASEAN the foremost
are all important for regional economic
forum for promoting peace, stability and
integration. The report also criticized
prosperity in the dynamic Asia-Pacific
RCEP's guiding principles which include a
region. Given the increasing economic
Page 3 of 4
“flexibility clause” that allows for special
and differential treatments plus
additional leeway to the less developed
ASEAN member states. The ADB views
that while such clause can help break
deadlocks and protect disparate self-
interests, it can also limit or even curtail
progress in achieving greater
liberalization. (24 October 2013 website
via ARIC)

IN FOCUS

The International Monetary and

Financial Committee (IMFC) is
responsible for advising and reporting to
the IMF Board of Governors as it
manages and shapes the international
monetary and financial system. The
IMFC also monitors developments in
global liquidity and the transfer of
resources to developing countries;
considers proposals by the Executive
Board to amend the Articles of
Agreement; and deals with unfolding
events that may disrupt the global
monetary and financial system.

The IMFC has 24 members who are

central bank governors, ministers, or
others of comparable rank and who are
drawn from the governors of the Fund's
188 member countries. The membership
reflects the composition of the IMF's
Executive Board: each member country
that appoints an Executive Director and
each group of member countries that
elects, an Executive Director appoints a
member of the IMFC. The group is
currently chaired by Tharman
Shanmugaratnam, Deputy Prime
Minister and Minister for Finance of
Singapore, who was selected to head the
Committee in March 2011.
Prepared by the International Relations
Department, International Sub-Sector.

Page 4 of 4