4/26/99 - US Wants Allies To Repair Economies
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WASHINGTON, Apr 26, 1999 (AP Online via COMTEX) -- The Clinton administration, enlisting the support of Federal Reserve Chairman Alan Greenspan, pushed ahead today with efforts to persuade some major U.S. allies to do more to get a shaken world economy back on track.
Greenspan joined Treasury Secretary Robert Rubin in meetings with German Finance Minister Hans Eichel and Hans Tietmyer, head of Germany"s central bank.
The discussions were expected to center on recent worrisome signs of an economic slowdown in Europe.
A key administration goal is to convince both Germany and Japan that more must be done to promote economic growth and take some of the pressure off America"s soaring trade deficit.
The United States is the only major economy doing well at present. U.S. officials are concerned that without a pickup in growth in Japan and Europe, the global recovery from the 20-month-old Asian currency crisis will remain uncertain.
Deputy Treasury Secretary Lawrence Summers told an audience Sunday night that if America"s allies do their part to bolster global growth, the United States will do ""everything we can to preserve solid growth in our economy and keep our own markets open to the emerging economies.""
While there are a number of hopeful signs that the financial crisis that pushed one-third of the globe into recession is finally ending, Rubin has repeatedly cautioned against complacency, warning that the world is ""not on healthy, firm footing, because we are the only economy doing well.""
In addition to the one-on-one sessions with Germany and Japan, Rubin and Greenspan were to join their counterparts from the world"s seven richest countries for talks on the global economy later in the day. The Group of Seven nations are the United States, Japan, Germany, France, Britain, Italy and Canada.
Along with the need to promote better growth among the large economies, the G-7 officials will also focus on a package of U.S. proposals to try to remodel the global financial system to avert or at least better handle future Asian-style currency crises.
The United States scored an early victory on its proposals when the International Monetary Fund announced Sunday that its executive board had given final approval to a major change in IMF procedures designed to speed billions of dollars in financial assistance to countries before their economies are ravaged by economic turmoil.
Clinton had first called for the IMF to adopt the new approach of approving contingency loans for countries pursuing sound policies in hopes that the presence of large back-up reserves would convince investors to stay put.
During the recent global currency crisis, the IMF has approved more than $100 billion in rescue packages but only after nations have been pushed into deep recessions and their currencies pummeled by frightened investors all rushing for the exits at the same time.
In announcing approval of the new contingent credit lines, IMF Managing Director Michel Camdessus said that it would encourage countries to pursue proper policies and could end up costing the IMF less by providing support up front before disaster strikes.
""I am confident that this will be an important contribution for the world to be better prepared for future crisis,"" Camdessus told reporters.
President Clinton also praised the IMF action and expressed the hop that it would be the first of a number of reforms to the world monetary system that the international community will approve including proposals he will put forward at this year"s economic summit in Germany.
""I hope we will ratify a number of changes to the global financial system ... that will avoid having another financial crisis like the one we saw in Asia,"" Clinton told an audience Sunday night.
Not all reaction was as upbeat. The Group of 24, representing the world"s developing countries, said in a draft communiqu that the contingent credit lines will not be enough given the bleak economic prospects in much of the world.
They called on international institutions and rich countries to do much more, including expanding a proposal to sell IMF gold reserves to provide debt relief to the world"s poorest countries, according to the draft statement obtained by Dow Jones Newswires.
Copyright 1999 Associated Press, All rights reserved.
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By MARTIN CRUTSINGER |
