Remarks by Treasury Secretary Jacob J. Lew at IMF-World Bank Spring Meetings

Good afternoon. Let me thank our hosts at the IMF and the World Bank for a productive and successful series of meetings this week.

I would like to begin with a look back on the progress made since we met here last year. In that time, the Obama Administration made significant progress advancing U.S. leadership in the global economy. We worked with Congress to secure Trade Promotion Authority and reauthorize the Export-Import Bank. We reached agreement with our international partners on TPP, the Iran nuclear deal, and a stepped-up strategy to confront terrorist financing. And after several long years, with the support of the IMF and so many of you around the world, Congress passed the IMF quota and governance reforms which puts the Fund on strong financial footing and reinforces the central leadership role of the United States in the global economic system.

It was also a landmark year for international development, which, in addition to IMF quota reform, saw the adoption of the Addis Ababa Action Agenda and the 2030 Agenda for Sustainable Development, and culminated with the successful adoption of the Paris Agreement on climate change. The World Bank has a critical role to play in helping countries translate these ambitious commitments into concrete progress. Both the World Bank and the IMF can help countries diversify their sources of development finance, particularly by strengthening their capacity for domestic resource mobilization.

The progress of the last year has helped advance U.S. interests both at home and around the world. Here at both the G-20 and the Spring Meetings, that interest centers around the drivers of global growth. Over the past several days of discussions with Finance Ministers and Central Bank Governors, the United States has made clear the need for decisive policies to boost demand and promote a sustainable and balanced global recovery, particularly in countries with large current account surpluses. Global growth to create jobs and raise living standards must remain at the top of the global community's economic agenda.

The U.S. remains one of the bright spots in the global economy, with real GDP nearly 10 percent higher than at its pre-recession peak. Labor market conditions are improving steadily. The U.S. economy continues to generate more than 200,000 jobs per month on average and the unemployment rate is falling close to its pre-recession level.

But as we expressed throughout these meetings, the United States cannot and must not be the only engine of growth, nor the importer of first and last resort for the global economy. All major economies need to deploy a full toolkit of economic policy measures, including monetary and fiscal policies and structural reforms, to address weak demand, boost employment, and raise standards of living.

While the U.S. economy is on a solid path, the global recovery remains uneven and downside risks have become more pronounced, due in large part to a continued shortfall in aggregate demand. Policymakers need to work together to ensure that the weakness in global growth does not become further entrenched.

Throughout our discussions, we reaffirmed the importance of all G-20 members honoring their commitments to move more rapidly toward more market-determined exchange rate systems, avoid persistent exchange rate misalignments, and refrain from targeting exchange rates for competitive purposes. This means that we will consult closely and work together. And, of course, G-7 countries have made even further commitments. The G-7 countries need to set the standard in their conduct and policies.

Efforts by China to bolster household income will support China's economic rebalancing towards consumption-led growth. Structural measures such as state-owned enterprise and financial sector reforms and steps to reduce excess capacity will support China's economic transition. A renewed commitment to reforms and consumer-friendly fiscal policies will help foster the conditions for an orderly transition to a market-determined exchange rate. In discussions with my counterparts, I urged continued progress on the U.S.-China Bilateral Investment Treaty (BIT) as well as on export credits, particularly through China's engagement in developing new export financing guidelines at the International Working Group on Export Credits. And I look forward to advancing our bilateral economic engagement during the upcoming Strategic & Economic Dialogue (S&ED).

In the context of the G-20, Japan has committed to use all policy tools--monetary, fiscal and structural--to foster confidence and strengthen the recovery and agreed that monetary policy alone cannot lead to balanced growth. Given the backdrop of weak global growth, Japan needs to look to domestic rather than external demand. It is important that overall fiscal policy be supportive, and that an ambitious structural reform agenda prioritizes measures to lift near-term growth. Foreign exchange markets remain orderly and it is important that all countries adhere to their G-7 and G-20 commitments regarding exchange rate policies.

In Europe growth has picked up, albeit from a very weak level, but demand in many countries remains tepid and Eurozone unemployment remains high. Monetary policy alone will not generate the balanced growth Europe needs. A comprehensive policy approach, using all policy levers including fiscal policy and structural reform, is needed to promote sustainable and balanced economic growth across Europe. Countries with large external surpluses and fiscal space need to adopt fiscal policies that drive demand, particularly investment.

Our discussions also focused on the importance of increased investment in sustainable infrastructure, including by strengthening the role of multilateral development banks, to boost growth. Today's low interest rate environment makes it an opportune time to make growth enhancing infrastructure investments.

We also discussed the challenge of the Syria crisis and other cases of forced displacement, and the imperative to address both the root causes of unprecedented movements of people and the host countries that welcome them. I asked the World Bank to establish a Global Crisis Response Platform that would assist refugee populations and their host communities with access to jobs, education, health services, and basic infrastructure.

The G-20 must continue to focus on strong implementation of financial reform, specifically through implementation of the FSB's total loss-absorbing capacity (TLAC) standard for banks beginning in 2019, as well as derivatives reforms committed to by the G-20 in 2009. We also welcome the G-20 sharpening its focus on policies and country actions to accelerate financial inclusion, especially through digital channels.

And finally, while much as been achieved it he past five years to strengthen the global financial system, including implementation of quota reform, the IMF can provide critical support to the international monetary system by further strengthening its surveillance of our economies and promoting strong, sustainable and balanced growth. It can also do so through its research on fiscal space and structural reforms. The foundation of a strong global economy and financial system is sound macroeconomic policies and a robust financial regulatory system.

So again, let me thank the IMF and World Bank and my counterparts around the world, and I am happy to take your questions.

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