IMF pledges new efforts against economic threats
Sunday, April 17, 2011
WASHINGTON (AP) — World financial officials pledged increased cooperation in dealing with threats to the global economic recovery such as rising oil prices.
The policy-setting committee of the 187-nation International Monetary Fund said in a joint statement issued after its spring meeting that the economy is rebounding from a recession and gaining strength, but is still vulnerable.
The group pledged to coordinate economic efforts to keep the recovery on track and address challenges such as rising inflationary pressures in China and other emerging markets.
“Although we are in a better position that we were a year ago, there are significant vulnerabilities,” Singapore’s finance minister, Tharman Shanmugaratnam, the chairman of the IMF group, told reporters. “We are still in a fragile situation. We have to be extremely watchful.”
Treasury Secretary Timothy Geithner held talks finance officials from the European Union as well as Portugal and Greece, both facing significant debt problems.
Geithner’s meeting with Portuguese Finance Minister Teixeira dos Santos reviewed that country’s recent decision to seek financial support from the European Union and the IMF, the Treasury said in a statement.
The discussions, which took place on the sidelines of the spring meetings of the IMF and the World Bank, followed meetings on Friday of the Group of 20 nations. That group includes traditional economic powers such as the United States and European nations, and emerging economies such as China, India and Brazil.
The G-20 reached agreement on increased surveillance in an effort to prevent the buildup of the kinds of dangerous imbalances that contributed to the 2008 financial crisis which pushed the global economy into the worst downturn since World War II.
The G-20 said they would closely follow such indicators as government budget deficits, trade deficits, personal savings levels and investment flows between nations. The intent is to spotlight troubles before they grow so large that they threaten global growth.
Despite the deal, it was not clear how effective the new system will be.
Geithner said at the IMF meeting that the U.S. would work to tackle its deficit, one of the chief imbalances the new monitoring system hopes to control.
“The United States will do its part to address our external deficit and repair our public finances,” Geithner said. He also said countries such as China that tightly manage their currencies should move toward more flexible systems and “allow their exchange rates to adjust in response to market forces.”
After the daylong G-20 talks ended Friday, French Finance Minister Christine Lagarde told reporters that the monitoring agreement was a significant achievement in efforts to restore confidence and prevent future financial crises.
Lagarde said all G-20 nations will take part, but the focus at the start would be on seven of the world’s largest economies. She declined to name all of those countries but the group is expected to include the U.S., China, Japan, Germany, France, Britain and India.
What about the process remains unknown, including whether countries found to have dangerous imbalances will be identified publicly. China in the past has blocked public release of criticism it has received from the International Monetary Fund.
The initial monitoring effort will be reviewed at an October meeting of the G-20 finance officials. Because there is no enforcement mechanism, it’s unclear what pressure can be brought to bear from the monitoring. World financial officials are promising increased cooperation in dealing with threats to the global economic recovery such as rising oil prices.
The policy-setting committee of the 187-nation International Monetary Fund says the economy is rebounding from the recession and gaining strength, but is still vulnerable.
The group is pledging to coordinate economic efforts to keep the recovery on track and address challenges such as rising inflationary pressures in China and other emerging markets.