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Remarks of Secretary Lew at the IMF-World Bank Spring Meetings

Location: Washington, DC

Good afternoon, I would like to thank our hosts at the IMF and the World Bank, as well as the Australians, for holding this event and all of you for coming.

The discussions of ministers and governors over the last two days were centered around the growth agenda. Driving growth that creates jobs and raises living standards is now the top priority for the global community, and that focus marks a turning point in the global recovery.

Before taking your questions, let me make a few observations about the international economic landscape, starting with the United States. The U.S. economy continues to gain strength, and as the International Monetary Fund noted in its latest World Economic Outlook, the U.S. will remain a main driver of global growth going forward as private sector demand increases and fiscal headwinds are reduced.

Still, we remain concerned that too many Americans cannot find jobs and too many Americans who have jobs are struggling to get by. The President is committed to confronting these challenges by fostering growth, increasing job creation, and expanding opportunity. He demonstrated that with his recent budget, which includes making investments in infrastructure, reforming our business tax system, and expanding manufacturing. This budget puts forward smart, proven strategies to boost our competiveness and bolster America's middle class while maintaining fiscal discipline.

In conversations with my European counterparts, it is clear that while the euro area economy has started to grow, concerns remain about low inflation and very modest growth. More needs to be done to ignite growth and guard against further disinflation. This will help reduce the burden of adjustment in the periphery and promote demand rebalancing in the euro area while fueling growth, investment, and job creation across Europe.

Over the past two years, Japan's recovery from a decade and a half of entrenched deflation has been driven largely by domestic demand. With challenges in the outlook for domestic demand, it is important that the Japanese authorities remain committed to calibrating all three arrows of Japan's economic policy to sustain a healthy rate of domestic demand growth. Long term structural reforms will be key to creating sustainable growth.

The forward-looking reforms set out in China's Third Plenum hold promise for a shift to a more balanced economy that delivers higher living standards to its population, as well as continued economic stability and growth that have characterized China's remarkable economic progress. The timing and specifics of China's reform agenda will be important to that economic transition. Rebalancing the Chinese economy will require further exchange rate appreciation so that consumption, rather than investment, drives domestic demand.

Volatility in emerging markets over the past few months has receded recently. Many emerging market countries have taken important actions to strengthen their macroeconomic and institutional frameworks.

Stronger growth in the United States will benefit emerging markets and the entire global economy. Emerging market economies can best manage potential spillovers from an upturn in growth in advanced economies through policies that support strong economic fundamentals, including flexible exchange rates.

Let me now turn to Ukraine, which was a significant part of our discussions. The international community is united in the effort to support Ukraine as it moves down a path to economic growth and political stability. We all recognize the Ukrainian people's right to achieve their economic aspirations and determine their own future. To that end, presidential elections will be held next month to give all Ukrainians a say in their country's future. At the same time, Ukraine's leaders have begun to embark on a meaningful, market-oriented reform program. These reforms will allow Ukraine to tackle longstanding economic challenges and unleash the country's significant potential.

In my meetings, including the one yesterday with the Russian finance minister, I emphasized that the United States will continue to impose costs on Russia for its illegal and illegitimate occupation of Crimea and, moreover, that we are fully prepared to impose additional significant sanctions on Russia if it continues to escalate the situation in Ukraine. I would also note, there is broad and strong unity within the G-7 on increasing the sanctions and costs in response to escalating action from Russia. As Ukraine takes steps to shore up its economy, the international community is providing financial and technical assistance. The IMF, which has assumed a leading role in the global response, has forged a preliminary agreement with Ukraine on a sizable loan program. And on Monday, I will sign a declaration moving forward a $1 billion loan guarantee agreement with Ukrainian Finance Minister Shlapak.

While countries like the United States are moving forward with critical assistance, there is no doubt that only the IMF has the capacity to provide the full sweep of financial and technical support that Ukraine requires and will continue to require for the foreseeable future. The fact is, the IMF is indispensable, and the United States has an immense stake in the strength and effectiveness of this institution. That is why the United States is committed to the implementation of the 2010 quota and governance reforms.

While we were deeply disappointed that lawmakers failed to include the IMF reforms in the Ukraine assistance package, there is important bipartisan support for taking action and we will continue to work with Congress to get legislation passed this year. We have included proposed legislation in the President's latest budget request, and we will keep taking steps to get this done.

In closing, I want to underscore that over the last couple of days the international community has made it clear that boosting growth is our top priority, and the United States will continue to work with our international partners to keep moving that vital growth agenda forward.

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