Transcript from Asia Business Report, IMF and World Bank annual summit meetings coverage
LIVE in Bali, approximately 09:30 am Bali time
SHARANJIT LEYL, ANCHOR: Hello and welcome to Asia Business Report. I’m Sharanjit Leyl. Two warnings in 24 hours from the International Monetary Fund. In the last hour the international lender says risks could rise sharply if trade tensions escalate or pressures in emerging markets were to worsen -- that’s from the latest global financial stability report. To help break it all down, we’ve got Asia Business correspondent Karishma Vaswani who joins us from that meeting in Bali.
Karishma, tell us the details.
KARISHMA VASWANI, ASIA BUSINESS CORRESPONDENT: Well Sharanjit, the IMF says there are dangerous undercurrents that are on the horizon for the global financial system even though the environment has been relatively good so far. These are the things that we need to watch out for because risks are rising for emerging markets in terms of their exposure to rising U.S. interest rates and those trade tensions that we talked about in the world economic outlook yesterday as well.
Now joining me to pick this report apart is Eric LeCompte, he’s the director for the Jubilee USA Network, it’s a nonprofit organization that looks directly at debt relief, especially for the most vulnerable.
Tell me, Eric, what did you think about this report? I know you’ve covered the IMF’s report for the better part of the last ten years -- what was the main focus for you in this do you think?
ERIC LECOMPTE, JUBILEE USA NETWORK: Well, I think there’s two takeaways from this report. The first takeaway is that although things are generally stable right now, we could be within six months to a year of some serious risks to the financial system. In fact, the IMF report says we have some dark clouds on the horizon that we need to be careful about.
I think the second takeaway from this report, which is also very important, is although we’ve seen economic recovery ten years after the financial crisis, that economic recovery has been unequal. We still see rising inequality, and we see that economic recovery is not shared and I think we see that around the world even with recent elections. People are voting on these complicated issues because they feel left out of the financial system.
KARISHMA VASWANI, ASIA BUSINESS CORRESPONDENT: You know, that’s some of the language we’ve seen in both the report today and yesterday -- the IMF pointing to the fact that this fracturing of the multilateral agreement, the system that’s kept the world prosperous for the last seven years or so, is going to lead to more problems in the future. What do you think they need to raise or make people aware of to ensure that these systems stay in place?
ERIC LECOMPTE, JUBILEE USA NETWORK: Well, I think there are a number of things and I think the International Monetary Fund report points to some of the solutions. I think one of the most important things that needs to happen is we need to get debt levels around the world under control. We also need to protect ourselves from speculative, risky investment. I think what everyone acknowledges right now, whether it’s the United Nations or the International Monetary Fund, is there is a recipe that creates financial crisis.
That recipe is two part: the first part of that recipe is debt crisis -- countries not having enough revenue because of tax evasion. The second part is speculative, risky behavior. When they [the two parts] come together, we have financial crisis. So we’ve seen the reports that there’s a recipe, and they’re pointing to solutions, [but] we don’t necessarily have total agreement on what the solutions [are] to prevent the next financial crisis.
KARISHMA VASWANI, ASIA BUSINESS CORRESPONDENT: Eric LeCompte there -- thank you so much for joining us. We’ll have more for you throughout the day from the IMF and World Bank’s annual summit here in Bali on the state of the global financial system and the global economy.
SHARANJIT LEYL, ANCHOR: Alright, we look forward to hearing from that.