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Despite the global upswing in economic activity, the IMF's steering committee has warned policymakers to guard against complacency, citing medium-term economic risks and rising geopolitical tensions.
The International Monetary and Finance Committee (IMFC), in a communique issued on Sunday, said there has been a notable pickup in investment, trade, and industrial production.
"But, the (global economic) recovery is not yet complete, with inflation below target in most advanced economies, and potential growth remains weak in many countries," the communique said.
"Near-term risks are broadly balanced, but there is no room for complacency because medium-term economic risks are tilted to the downside and geopolitical tensions are rising," it further said, adding that the upturn in global activity provided a window of opportunity to tackle key policy challenges and stave off downside risks.
The committee advised the policymakers to go for "accommodative" monetary policies and fiscal policies that are "flexible and growth-friendly".
"Monetary policy should remain accommodative, where inflation is still below target and output gaps are negative, consistent with central banks mandates, mindful of financial stability risks, and underpinned by credible policy frameworks," it said.
"Structural reforms, well-sequenced and adapted to individual country circumstances, should aim to lift productivity, growth, and employment; promote competition and market entry, and enhance resilience," it further said.
The committee also warned against excessive volatility in exchange rates, saying it may adversely impact economic stability.
"Flexible exchange rates, where feasible, can serve as a shock absorber, but, excessive volatility or disorderly movements in exchange rates can have adverse implications for economic and financial stability," the IMF communique said
In their communique, the IMF member nations said they were committed against competitive currency devaluations.
"The IMF member countries pledged to work together to achieve a level playing field in international taxation; address tax and competition challenges raised by the digitalisation of the economy; and tackle the sources and channels of terrorism financing, corruption, and other illicit finance," the communique said.
The countries also pledged to work towards reducing excessive global imbalances in a way that supports global growth by pursuing appropriate and sustainable policies.
"The IMF members countries reinforced their commitment to achieving strong, sustainable, balanced, inclusive, and job-rich growth, and said to this end, they will use all policy tools monetary and fiscal policies and structural reforms both individually and collectively," the communique said.
"We will support countries dealing with the macroeconomic consequences of pandemics, cyber risks, climate change and natural disasters, energy scarcity, conflicts, migration, and refugee and other humanitarian crises," it said.
The meeting was chaired by the Governor of Bank of Mexico, Agustin Carstens. It was attended by IMF chief Christine Lagarde and Finance Minister Arun Jaitley, along with other dignitaries from across the globe.