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IMF, World Bank tackle challenges of global crisis

Top International Monetary Fund and World Bank officials were meeting in Washington Saturday faced with addressing unprecedented challenges in the worst global economic crisis in generations.

Pledges made by Group of 20 leaders three weeks ago in London to stimulate their economies and reform financial regulation, as well as to substantially boost IMF resources, were expected to dominate the two-day meetings.

The United States called for progress on commitments to provide the 185-nation IMF with the additional financing to reinforce the institution's growing role in underpinning the global economy, as called for by the G20.

"In order to ensure recovery, the IMF must ... have adequate resources and instruments to respond forcefully to address the needs of its emerging market and developing country members hard hit by the crisis," US Treasury Secretary Timothy Geithner told the spring meeting of the IMF's top steering committee.

The G20 developed and major developing countries agreed to triple the IMF's lending resources to 750 billion dollars when they met in London on April 2.

Geithner welcomed contributions made so far but stressed that "significant progress (on getting the additional 500 billion dollars) ... must be an important outcome of these meetings."

President Barack Obama's administration, he said, has made a commitment to seek Congressional approval for 100 billion dollars and he urged other member states "to consider substantial additional contributions."

Geithner noted that at the London G20 summit, the parties had committed themselves to "taking whatever action is necessary to restore trend growth and deliver the scale of sustained effort necessary to do so."

Accordingly, the United States was now asking the "IMF to provide a comprehensive report to its membership and the G20 in June, assessing the progress being made and whether further pressures are needed."

Top officials have highlighted tentative signs of stabilization in the crisis buy have also warned that recovery will be long and fraught with risks in the battle to end a vicious circle of slowing growth and tight credit.

The IMF earlier this week sharply downgraded growth forecasts, saying it now sees the global economy contracting by 1.3 percent this year before returning to growth of 1.9 percent in 2010.

The European Union told the IMF steering committee that it planned "ambitious reform" of the financial sector this year to address the failings that led to the current global crisis.

"The crisis has exposed unacceptable weaknesses in the current governance of international and European financial markets," EU Economic Affairs Commissioner Joaquin Almunia said in a statement.

The reforms will aim to give the EU a supervisory framework to detect potential risks early and deal with them before they have an impact, he said.

On Friday, the Group of Seven major economies, in their customary meeting on the eve of the sister institutions' annual meetings, were more upbeat on the outlook than the IMF.

"Recent data suggest that the pace of decline in our economies has slowed and some signs of stabilization are emerging," a G7 statement said.

"Economic activity should begin to recover later this year amid a continued weak outlook and downside risks persist."

The G7 -- Britain, Canada, France, Germany, Italy, Japan and the United States -- said they were "committed to act together to restore jobs and growth and to prevent a crisis of this magnitude from occurring again."

A subsequent meeting of the Group of 20, which includes the G7 and developing countries such as Brazil, China, India and Russia, ended without a statement.

Security was tight around the institutions' headquarters in the US capital, where several protest demonstrations were scheduled.

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Publication:AFP Global Edition
Date:Apr 25, 2009
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