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To: Glenn D. Rudolph who wrote (93217)	2/8/2000 6:32:00 PM
From: GST	Read Replies (1) \| Respond to of 164684

INTERVIEW-IMF frets on overvalued US stock prices By Janet Guttsman WASHINGTON, Feb 8 (Reuters) - ``Overvalued' U.S. share prices and low U.S. savings rates are two risks to an otherwise rosy world economic picture, the outgoing head of the International Monetary Fund said Tuesday. Michel Camdessus, who steps down next Monday after 13 years as the fund's managing director, told Reuters in an interview that low savings rates were a major factor behind the high U.S. current account deficit. ``We have in this great country a superb economy, but you have this extreme risk of dramatically insufficient domestic savings translating into a current account deficit of very great size,' Camdessus said. ``And there is indeed a risk of an overvalued financial market -- by any conventional standards -- which create a situation of vulnerability of which we must be mindful.' Camdessus, who recently stepped up his forecasts for world economic growth, told a news conference earlier that rising oil prices put a ``question mark' over the economic outlook. But he was pleased by the efforts taken by oil producing countries to diversify their economies so they would be ready for a downturn in oil prices in the future. Camdessus, a Frenchman, also said in the interview he was worried about slow progress in Europe on the structural reforms which Europe needed to implement to reap the rewards of a new, technology-based economy. ``The new economy will not reduce structural unemployment in Europe if you do not go ahead in addressing the old chapters of the European reform agenda, which in some countries, including mine, have not been sufficiently addressed.' The IMF has long been urging countries like France and Germany to make labor markets more flexible and remove other barriers to rapid growth. Camdessus also urged emerging economies not to ease up on their ``uncompleted agenda' of financial and corporate reforms as they recovered from the financial crisis of 1997-99 and ``graduated' away from the supervision of the IMF. ``You have the vulnerability which is related to this feeling of complacency in economies where the tendency is to graduate and cry 'hallelujah'..., even where there is still an uncompleted agenda of reform, particularly in the corporate sector and in the banking sector.' The IMF put together rescue deals worth tens of billions of dollars as one country after another teetered on the brink of financial and economic collapse. But one-time patients Thailand and South Korea have already stopped drawing on IMF loans and economies are recovering elsewhere as well. ``I have seen the world very close to a major meltdown in October 1998,' Camdessus said, referring to the international crisis caused by a combination of a Russian debt default, the collapse of hedge fund Long Term Capital Management and mounting financial problems in Brazil. ``I am more optimistic now than I was six months ago, and that's not just Michel Camdessus, that's the IMF.'