Finance supremos get new powers to tackle world cash crisis
24/04/2006 - 07:05:41
The International Monetary Fund and the World Bank have received new guidelines to deal with high and rising oil prices, trade gaps and other problems that threaten to disrupt global economic growth.
The policy-setting committees for the 184-nation IMF and the World Bank told the two lending institutions over the weekend to attack corruption and, in the IMF’s case, to reapportion voting power so that under-represented nations such as China, South Korea and Mexico had more of a say in IMF decision-making.
The IMF will also play a greater role in trying to resolve global financial problems such as the soaring US trade deficit and corresponding surpluses in Asian nations and dealing with other problems before they get out of hand and threaten the markets.
Rodrigo Rato, the IMF chief, said work would begin today to draft proposals on increasing voting rights and holding multilateral consultations on economic problems to be presented to the annual meeting of the IMF in Singapore in September.
Oil prices, now at a record $75-plus per barrel, were among the developments causing officials from Europe, the US and other countries at the institutions’ spring meetings to worry about the prospects for long-term growth.
At the outset of the meetings, the IMF predicted the global economy would grow by 4.9% this year, the fourth straight year of global growth over 4%, the best performance since the early 1970s.
“It would be fair to say to say to the world: ‘You never had it so good’,” said the IMF’s chief economist Raghuram Rajan. “But challenges are building in the background.”
In talks that wrapped up yesterday, ministers resolved a dispute over anti-corruption efforts by pledging “to improve governance in all countries”.
Some European nations complained that the World Bank’s president, Paul Wolfowitz, was emphasising corruption-fighting at the expense of poverty reduction. The former top Pentagon official began his five-year term in June.
Wolfowitz told a closing news conference that he was satisfied with how the debate was resolved.
“These are complex and nuanced issues, but we must develop a common approach if we want to deliver results for the poor,” he said. “It is an effort that will take some time.”
Wolfowitz said simply uttering the word corruption drove headlines. “But the real issue we are addressing in the World Bank is how to promote good governance and accountability within our lending and project portfolios,” he said.
The US and other major industrial nations say it is critical to crack down on corruption so that the taxpayer dollars supporting the bank are not wasted.
“With billions of people still living in destitute conditions, we cannot rest,” US treasury secretary John Snow said. “We must do more to make these ideas and programmes even more productive, beneficial and effective.”
The meetings went ahead without any of the large-scale demonstrations that in years past have filled the streets around the IMF and World Bank headquarters, a few blocks from the White House.
This year’s events were on a small scale; one man among a group of 30 protesters was arrested on Saturday and charged with carrying a stun gun.
Anti-poverty activists were disappointed the meetings did not generate more momentum for the international goal of cutting poverty in half by 2015 and boosting aid to poor countries by €40.5bn over the next four years.
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