IMF urges emerging markets to maintain exchange rate flexibility

THE International Monetary Fund (IMF) has urged emerging market economies and countries with unsustainable public debt, many of whom are in Africa, to preserve exchange rate flexibility and move proactively to restore sustainability amidst prevailing global economic uncertainty.

- SIPHELELE DLUDLA

This comes as the IMF warned that its latest World Economic Outlook, to be released on Tuesday, will include notable markdowns in growth projections, but not recession, as well as markups to the inflation forecasts for some countries.

IMF managing director, Kristalina Georgieva, on Thursday said the resilience of low economic growth and high debt was being tested again by the reboot of the global trading system.

Delivering her curtain raiser speech at the IMF/World Bank Spring Meetings in Washington D.C., Georgieva said trade distortions—tariff and nontariff barriers—have fed negative perceptions of a multilateral system seen to have failed to deliver a level playing field.

Georgieva said financial market volatility was up, and trade policy uncertainty "was literally off the charts".

"This feeling of unfairness in some places feeds the narrative: we play by the rules while others game the system without penalty. Trade imbalances stir trade tensions," she said.

"Putting together all the recent tariff increases, pauses, escalations, and exemptions, it seems clear that the US effective tariff rate has jumped to levels last seen several lifetimes ago. As the giants face off, smaller countries are caught in the crosscurrents.