Vitas Vasiliauskas: “The monetary policy of central banks has brought the global economy to life; in order to maintain it, we need further efforts from national and international institutions”
On 9–10 October, Vitas Vasiliauskas, the Chairman of the Board of the Bank of Lithuania, will take part in the annual meetings of the International Monetary Fund (IMF) in Lima (Peru). Having assessed the newest IMF projections for global economic and financial markets, the heads of central banks and ministers of finance will seek to coordinate actions that would boost the global economic development.
When assessing the newest data and trends of economic development, V. Vasiliauskas, the Chairman of the Board of the Bank of Lithuania, said that “global economic development is still sluggish and uneven, projection indicators are going down, and the nervousness in the financial markets is noticeably increasing.” According to him, recent rapid and more frequent fluctuations in capital, foreign exchange and commodity markets show that investors are uncertain about the global economic development and are not confident about the effectiveness of the economic policy.
“In order for these signals of mistrust to not become a self-fulfilling prophecy, institutions must immediately focus on well-coordinated and, most importantly, effective actions”, said the Governor of the Bank of Lithuania. He pointed out that even though global economic growth rates are forecast to be higher in 2016, compared to this year, there are not many reasons to be optimistic: the development in advanced economies is hindered by the low level of investment, low productivity growth and demographic challenges, whereas emerging markets face financial difficulties and the negative impact of declining commodity prices.
Based on EU experience, V. Vasiliauskas said “the regions of the world face different challenges; however, all of them are the same in one aspect: regions have to consistently implement ambitious commitments and the decisions that they have previously made.” Even though it is projected that the overall EU GDP could increase by 6 per cent over the next 10 years if at least half of the structural reforms would be implemented, he pointed out the European Commission’s survey, which revealed that during 2014 not a single EU member state had fully implemented any of the 157 recommendations that were addressed to them
“Accommodative monetary policy of central banks significantly adds to economic recovery and sparks optimistic hopes; however, if national and international institutions will not take additional measures, we cannot expect that the situation will change substantially”, said Vasiliauskas. He emphasised that when discussing the role of the IMF during its annual meetings, the main emphasis should be devoted to a more proactive role of the Fund in not only shaping the priorities of global economic policy, but also ensuring that structural reforms in the countries belonging to the organisation would be implemented without any delay.
Vitas Vasiliauskas, the Chairman of the Board of the Bank of Lithuania, is a member of the Executive Board of the IMF.