Sustainable Growth: How do we get there?
July 13, 2015
If we want to go fast we go alone, if we want to go far we go together
– Christine Lagarde, IMF Managing Director
On Wednesday, July 8th in Washington, DC the Brookings Institute hosted “Financing the Post 2015 Sustainable Development Agenda: What are the issues? And what is the role of the IMF?” The discussion’s keynote speaker was Christine Lagarde, Managing Director of the International Monetary Fund (IMF). Lagarde addressed key points of the international community’s approach to implementing the agenda’s goals in anticipation of the upcoming United Nations Summit held in New York this September where the Post 2015 Development Agenda will be adopted. Lifting the small boats, as Lagarde made clear, is a once in a generation window of opportunity for the collective globe to grasp and act upon, to change the “music”.
According to Lagarde, three emerging trends are changing the global landscape—velocity, variance and volatility. Rapid expansion of growth, high income inequality, climate change impacts and demographic injustice are just some of the factors impacting the development trends Lagarde presented. A stable foundation is what Lagarde believes is a must for countries to progress and work toward sustainable growth. And she stressed, that countries taking ownership of reaching this baseline is crucial to development progress going forward. While the IMF thinks that macroeconomic support is needed for struggling nations, a stable and sound foundation is essential. Thereafter, priorities Lagarde suggested countries should strive for include mobilizing revenues (such as a broad-based and fair tax system), well-managed public investment (right now around 30% of public revenue is lost), and development of the financial sector’s support of growth and poverty-elimination (through supervision and good investments).
Lagarde discussed the definition of the growth in the Post 2015 Sustainable Development Agenda; it must be sustainable and inclusive, focusing on empowering women and children through fairness and good economics. This will take collective effort by the entire international community, a sharing of “common responsibility in common fate.” Doing so will be a multidimensional challenge, said Lagarde, one that requires cooperation and committed, long-lasting partnerships
On what the IMF’s role is in all of this, Lagarde states, “we are not promising, we are delivering.” While the organization cannot give full monetary support, it can provide advice and capacity building to tackle poverty and sustainable growth. She highlighted women’s empowerment as an “economic game changer” and noted the IMF’s interest in assisting those countries eager to invest in long term infrastructure. Lagarde also summarized recent changes in IMF funding including targeting more vulnerable resources, maintaining a 0% long term interest rate and expansion of a concessional facilities safety net to a full 50%.
Following the keynote address, guest discussants weighed in on Lagarde’s message. Michael Elliott, CEO of the ONE Campaign strongly urged the private sector to provide an honest commitment to tackling corruption, illicit financial flows and international tax cooperation in order to help those who need it most. Nancy Birdsall, President of the Center for Global Development, spoke on energy subsidies, more progressive tax systems especially on energy. Homi Kharas, Senior Fellow and Deputy Director of the Global Economy and Development, Development Assistance and Government Initiative, echoed Lagarde’s call for infrastructure investment, calling for innovation, low carbon sustainability and affordability.
In closing, Lagarde reiterated on the ground cooperation of all forms of international actors to drive sustainable development, and hopes the upcoming UN conference will solidify such agreements.
Molly Pfeffer, Intern