The annual meetings of the IMF have a range of purposes – from discussions on the future of the world economic and financial architecture to solving some of the key global problems such as poverty and underdevelopment.

       For the IMF and issues related to world’s financial stability such gatherings as the October Annual meetings in Lima are an important juncture of surveying the vulnerabilities in the world economy and ways of pre-empting future economic calamities. In this respect, risks in today’s world economy are aplenty and are significant in all of the main centers of the world economy – from the fragilities across emerging markets, most notably in China, to lingering risks in Europe associated with the debt overhang in countries such as Greece, and to the risks of policy shifts in the US associated with the normalization of interest rates.

       Indeed, the backdrop for the 2015 Annual meetings of the IMF and the World Bank is far from stellar – according to the latest version of the IMF forecast for the global economy growth is set to decelerate from 3.4% in 2014 to 3.1% in 2015, with the most recent version of the forecast for 2015 and 2016 revised down by 0.2 percentage points. The bulk of the slowdown is expected to come from emerging markets, with China’s growth expected to decelerate from 7.3% in 2014 to 6.8% this year. For Russia the Fund revised its 2015 growth projection downwards to -3.8% (compared to earlier estimates of -3.4%), with 2016 now expected to bring further contraction in GDP as opposed to earlier expectations of moderate recovery.

       In light of the fact that the main part of the deceleration in the world economy is taking place on the back of the slowdown in key developing countries such as China, Russia and Brazil, perhaps the most pressing issue for the world economy is the accumulation of risks in emerging markets. In terms of IMF’s response to these challenges, it will be important to assist countries such as China in liberalizing its external economic policy. In this respect, the key decision that may be taken by the IMF later this year is on whether to admit the Chinese yuan into the special drawing rights (SDR) basket which would strengthen yuan’s bid to become a global reserve currency. The emergence of yuan as a global reserve currency would serve to accommodate the demand on the part of the world’s central banks in a greater array of reserve currencies – the legacy of the dollarization of the world’s economy has resulted in excessive dependency of central banks’ reserves on the whims of the dollar.

       Another risk pertaining to emerging markets is the fluctuations in commodity prices – in this respect the IMF needs to accord greater importance to assisting developing countries with structural measures directed at reducing resource dependency. A related theme is the policy of sovereign funds and global investment flows - the latter need to be liberalized in order to create more possibilities for optimal cross-border portfolio and direct investment flows. Finally, there is the risk of adverse implications from US rate hikes on emerging markets and for the Fund it will be crucial to promote greater policy coordination across developed and developing economies in order to avoid negative spillovers in the sphere of macroeconomic policy.

       Finally the one issue that remains an old sore for the Fund is the reform of the IMF itself – the Fund needs to change to reflect the new realities in the world’s balance of economic power. Back in 2010 the IMF’s members agreed to transfer more voting power to China and India and reduce the dominance of Western economies in IMF governance. Since then, however, the reform was delayed due the refusal of the US legislature to support the Fund reform. The current head of the IMF Christine Lagarde throughout the past several years has been very vocal on the need to garner support for the developing countries to receive a greater weight in the IMF. And while the Annual meetings have not resulted in any breakthroughs on this issue, the world’s financial and economic architecture is bound to change as the Bretton Woods institutions are complemented by the new building blocks such as the BRICS institutions. Going forward, the agenda of the Annual meetings of the IMF and the World Bank may well evolve towards greater coordination of policy priorities with the post-Bretton Woods organizations.

       Views expressed are of individual Members and Contributors, rather than the Club's, unless explicitly stated otherwise.