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Apr-14-2008

To Fix Global Markets Isn't Likely

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WASHINGTON, April 13 (Xinhua) -- Emerging and developing economies are maintaining robust growth despite a severe global financial turbulence but their resilience will be tested by the current crisis. (More...)
The recessions in the mid-1970s and early 1980s were worse than most people expect to experience now, even if things deteriorate further. (More...)
What is not clear now are that to what extent the financial turbulence in advanced economies will affect the financial system in emerging and developing economies, and that how the economic slowdown in developed countries will affect exports of emerging and developing economies. (More...)
'I think we should be very careful. (More...)
At the same time, $105-billion of new capital has been injected into troubled financial institutions. (More...)
The downbeat G7 communique noted that the world economy remains in a "difficult period" and that the financial market turmoil that was sparked in the U.S. subprime market is "more protracted than we had anticipated." (More...)
Jaime Caruana, director of the IMF's Monetary and Capital Markets Department, said there has been a "collective failure" to appreciate the economic damage caused by the subprime crisis. (More...)
Talk of the Great Depression is, if not alarmist, certainly alarming. (More...)
The G7 hosted executives from leading global banks at a dinner Friday night to discuss the latest developments in the crisis. (More...)
Reuters is the world's largest international multimedia news agency, providing investing news, world news, business news, technology news, headline news, small business news, news alerts, personal finance, stock market, and mutual funds information available on Reuters.com, video, mobile, and interactive television platforms. (More...)
U.S. Federal Reserve chairman Ben Bernanke, Indian finance minister Palaniappan Chidambaram and the rest of today's participants called on countries to work together to spur a rebound. (More...)
The participants in the meeting will vote on a package of measures intended to set IMF finances on a sound long-term footing. (More...)
Christine Lagarde is the French economy minister. (More...)
There is also a call for more effective financial supervision, in line with the recommendations of an international task force that reported to the G7. (More...)
"A World Bank spokesman declined comment on the documents but added that the bank is "committed to addressing its own shortcomings and will take disciplinary action against any staff members found responsible for wrongdoing." (More...)

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WASHINGTON, April 13 (Xinhua) -- Emerging and developing economies are maintaining robust growth despite a severe global financial turbulence but their resilience will be tested by the current crisis. This was concluded at the spring meetings of the International Monetary Fund (IMF) and the World Bank Group held here on April 12-13. "Emerging markets and developing countries have so far continued to grow strongly and show resilience in the face of the ongoing financial crisis, though their growth prospects have moderated and inflation risks have increased," noted a communique issued Saturday by the IMF's steering committee following a day-long meeting. What explains the resilience of emerging and developing economies are their improved policies, stronger balance sheets, as well as better macroeconomic conditions, according to Jaime Caruana, director of the IMF's monetary and capital markets department. [1] The G7 meeting comes as the U.S. subprime home loan crisis batters the world's biggest economy, weakening world growth, and roils global financial markets. The gathering of finance officials from Britain, Canada, France, Germany, Italy, Japan and the United States is seen as setting the tone for this weekend's meetings in Washington of the board of governors of the International Monetary Fund and World Bank. With a sharp slowdown in the world economy and soaring food prices that are particularly hurting the poor and stoking social unrest, the world's top finance officials face the challenge of addressing complex challenges without aggravating them. Finding a way forward that takes into account the diverging circumstances of the G7 economies poses its own tough challenge but G7 officials have expressed optimism the job can be done.[2] WASHINGTON ' Worldwide losses from the credit crisis could near $1 trillion, the International Monetary Fund said Tuesday, reflecting the massive cost of the breakdown in markets for home mortgages and other kinds of debt. The IMF, which is holding its semiannual meeting here this week, urged banks to disclose losses quickly, raise extra cash if necessary, improve their techniques for dealing with risk, and reconsider how top managers are paid so that they have better long-term incentives. The IMF estimated that banks, insurance companies, pension funds, and other kinds of investors will suffer huge losses: $565 billion on U.S. home mortgages, $240 billion on debt backed by commercial real estate such as office buildings and shopping centers, $120 billion on corporate loans such as those used to acquire businesses, and $20 billions on consumer loans such as credit cards. Those figures add up to $945 billion in losses expected within two years. That would be about $143 for every person on Earth, or $3,100 for every U.S. resident. 'What began as a fairly contained deterioration in portions of the U.S. subprime market has metastasized into severe dislocations in broader credit and funding markets that now pose risks to the macroeconomic outlook in the United States and globally,' the IMF said in its Global Financial Stability Report.[3]

Countries contributed to a pool which could be borrowed from, on a temporary basis, by countries with payment imbalances. It now spans 185 countries, and works to foster global monetary cooperation, financial stability, international trade, high employment, sustainable economic growth and poverty reduction. This is all noble and high-minded and swathed in consensus. Unfortunately, the meeting this weekend of the Group of Seven major industrial nations and the IMF's governing body in Washington could hardly be less agreeable. Global food prices are soaring and the oil price has climbed to $110 a barrel, piling on the pressure both for advanced Western economies and low income economies with a billion people still living on less than $1 a day. Now, on top of this, has come unprecedented turbulence in financial markets, a global credit crisis and massive losses sustained by the world's biggest banks.[4]

Just 12 months ago, finance ministers and central bank chiefs were basking in five consecutive years of strong world growth, unaware a U.S. housing boom was about to go bust, triggering what may be the biggest financial shock since the Great Depression. All of this has taken place at a time the IMF, traditionally a lender of last of resort in times of crises, has sought a new role for itself amid a sharp decline in borrowing from emerging and developing economies. The Washington-based lender has also sought to boost its relevance by giving emerging economies China, India, Brazil, Mexico and South Korea more voting power in the institution. While voting power changes and a new financial model aimed at putting the fund on sounder footing still need the approval of all of the IMF's 185 member countries, they were endorsed by the IMFC. "The fact that the most relevant economic and financial multilateral institution in the world shows the capability to reform itself at this very moment, constitutes by itself a response to the crisis and an indication that a global crisis has to be addressed with a global view," IMFC Chairman Tommaso Padoa-Schioppa told a news conference. While emerging economies such as China, India, Mexico, South Korea and Brazil support the changes in their relative voting power, some nations that stand to lose from the shift -- such as Russia, Argentina, Saudi Arabia, Iran and Egypt -- oppose the move, saying it does not go far enough.[5] The Washington-based IMF and World Bank were established 64 years ago to, respectively, regulate the global economy and provide aid to poor countries to reduce poverty. The finance ministers and central bankers said their meeting took place "at a time of unusual uncertainties surrounding global and financial market prospects. It stresses that the challenges facing the world economy are global in nature, requiring strong action and close cooperation among the membership." They said risks to the economic outlook "come from the still unfolding financial market turmoil and from the potential worsening" of housing markets and the credit crisis.[6] "The principal downside risk comes from the possibility that financial strains could deepen," said Simon Johnson, the IMF chief economist. That view was reinforced Friday when the Group of Seven industrialized nations said the economic outlook was weakening and called on the banks to "fully and promptly" reveal their risk exposure due to the current financial market turmoil within 100 days. The world economy "continues to face a difficult period. (and) near-term economic prospects have weakened," G7 finance ministers and central bank governors said after their own meeting here. "The turmoil in global financial markets remains challenging and more protracted than we had anticipated," they said.[7]

The International Monetary Fund predicted a U.S. recession that would exact a hefty toll on global growth, while leaders of the Group of Seven rich nations resorted to tougher talk to try to prop up the ailing U.S. dollar. With the U.S. economy dangerously close to -- if not already in -- a recession and the deflating dollar spreading economic pain worldwide, usual hot-button issues such as China's growing clout were pushed to the side as the G7, IMF and World Bank held their back-to-back meetings here. "It's not over yet," U.S. Federal Reserve Vice Chairman Donald Kohn said, summing up the uncertainty surrounding the financial market turmoil that has raged for eight months.[8] WASHINGTON, April 12 (Xinhua) -- The challenges facing the world economy are of a global nature, requiring strong action and close cooperation among the membership, the International Monetary Fund (IMF)stressed here Saturday. "Global financial instability has increased," the International Monetary and Financial Committee (IMFC), the steering committee of the 185-nation institution, said in a communique released following its 17th meeting. World economic growth has slowed and growth prospects for this year and 2009 have deteriorated, the communique said. It pointed out that risks to the outlook come from the still unfolding events in financial markets and from the potential worsening of housing and credit cycles while inflationary risks --notably from higher prices of food, energy, and other commodity --have also risen.[9] WASHINGTON (Reuters) - World finance officials on Saturday urged the International Monetary Fund to keep closer tabs on the global economy in the hope future crises like the one currently shaking world markets can be prevented. After one of its twice-yearly meetings, the IMF's 24-nation steering committee said global financial instability had increased and inflation risks had risen due to a sharp run-up in the cost of food and other commodities.[5]

"Inflationary risks — notably from higher food, energy and commodity prices — have also risen," the communique said. The IMF said governments, in dealing with these risks, must make sure inflation is kept under control, recognizing that each country's situation is different but coherent action is necessary. Another topic on the committee's agenda was IMF reform. The ministers said changes such as giving developing countries with rapidly growing economies, such as Brazil, India and China, slightly more of a say in IMF operations "will strengthen the fund's role in promoting financial stability and international monetary cooperation." Strauss-Kahn predicted the reforms would be approved by enough countries to meet the necessary threshold of 85 percent of the votes later this month. Most important decisions at the IMF, such as changing voting rights, require an 85 percent vote, giving the United States and the European Union effective vetoes.[6] Strauss-Kahn spoke at a news conference after a daylong meeting of the steering committee of the 185-nation IMF, which dealt with the unfolding global financial crisis that has affected economies around the world. In its communique, the committee noted "that a number of developing countries, especially low income countries, face a sharp rise in food and energy prices, which have a particularly strong impact on the poorest segments of the population." The committee urged the IMF to work closely with its sister institution, the World Bank, and other organizations to provide developing countries with financial support and policy advice.[6] "The committee urges the fund to work closely with the World Bank and other partners in an integrated response through policy advice and financial support." Food inflation has emerged as one of the main issues at this weekend's meetings of the 185-member IMF, competing for discussion time with the global credit crisis. Food prices have soared 48 per cent since the end of 2006, a "huge" increase that threatens to erase the gains the international community has made in reducing poverty in recent years, IMF managing director Dominique Strauss-Kahn said earlier this week.[10] With governments in Haiti, Egypt and the Philippines among others already facing social unrest because of rising food prices and shortages, Strauss-Kahn said that if the price spike continues, "Thousands, hundreds of thousands of people will be starving. Children will be suffering from malnutrition, with consequences for all their lives." Earlier Saturday, Germany's development minister, who is attending the World Bank's meeting Sunday, called for greater regulation of the global biofuels market to prevent its expansion from driving up food prices. "It is unacceptable for the export of agrofuels to pose a threat to the supply situation of the very people already living in poverty," Heidemarie Wieczorek-Zeul said in a statement. She said the world needs new rules that balance goals, including climate change mitigation, food security and social development. The development group Oxfam, a frequent IMF critic, said rich countries are largely responsible for the food crisis because they have been cutting aid to developing countries and encouraging biofuel production, which the IMF says is responsible for almost half the increase in the demand for food crops.[6]

Domenico Lombardi, president of the Oxford Institute for Economic Policy, said the voting power changes were disappointing to emerging economies who had hoped for more. “These changes are marginal and they don’t introduce any new dynamic,” said Lombardi who is also a senior scholar at the Brookings Institution. “It doesn’t generate an outcome that would impress real change,” he added. Lombardi, a former IMF board member, said the IMF was best positioned to use its analytical power because of the broad spectrum of its 185 member countries, but without a proper rebalancing of voting power and changes to its board it would be unlikely to bring about a coordinated policy response. Looking ahead, Strauss-Kahn said the IMF would scale up its analysis of the U.S. subprime mortgage market crisis and related credit squeeze affecting banks. “There is no other institution but the IMF likely to work on the linkages between the financial sector and the real economy, which is really what is at stake today,” he added. It would also expand its surveillance globally and look closer at how one country’s economy affects another, especially the impact of global economic imbalances, such as the current account deficits in the United States and massive surpluses in Asia and oil-producing countries. The IMF had a responsibility to clarify its role in poor countries and communicate that better to the outside world, Strauss-Kahn said.[11] The fund plans to expand its surveillance of the global economy and Strauss-Kahn said the IMF was well-positioned to provide policy advice on blunting the economic impact from financial crisis. British finance minister Alistair Darling said yesterday the IMF needs to develop an early warning system to spot crises, and said it needs to be held to account for its performance if future financial crises are to be prevented. The institution, which handed out billions of dollars in the past to rescue developing nations from economic peril, has long grappled with its changing role as financial crises have declined and fewer countries have turned to it for funding. Some member countries want it to step up its monitoring of global economic activity to heighten its profile in a world complicated by the rising influence of emerging powers.[11]

The IMF stressed that "the challenges facing the world economy are of a global nature, requiring strong action and close cooperation among the membership." Unlike the last IMF meeting in October, where internal reforms were high on the agenda, this time the multilateral institution faces a full-blown, and still unfolding, financial shock that began in August amid rising defaults on U.S. high-risk subprime home loans. Tasked with maintaining global financial stability, the IMF, whose own finances are strained, insists its expertise and global range make it a key player in resolving what Strauss-Kahn earlier called the worst financial crisis since the Great Depression of the 1930s. The IMF last week warned the global economy is slowing so rapidly it could slide effectively into recession this year and next.[12] Strauss-Kahn, who took the reins of the 185-nation institution in November, said the crisis shows above all the need for analysis of the links between the financial sector and the real economy. The IMF is "one of the rare" institutions" that can address the two sides of the problem, he said. Even while the IMF meetings are likely to be dominated by the economic gloom, the IMF faces its own financial distress. Established to promote global financial stability 64 years ago, the IMF finds itself out of step with the times and strapped for cash as countries shun its lending that carries what critics say are overly severe conditions. Strauss-Kahn took office promising to restore its relevance, credibility and ailing finances.[7]

"The concern expressed by the G7 communique is obviously also the concerns of the IMF," Strauss-Kahn said in a press conference at the conclusion of the IMF's policy-steering committee meeting. The G7 statement included the biggest shift in currency policy in years, noting that there have been "at times sharp fluctuations in major currencies and we are concerned about their possible implications for economic and financial stability." Strauss-Kahn said that countries are far from fixing global imbalances caused by some countries having major current account surpluses while others are running deficits, and warned that "new imbalances may have appeared through this turmoil" in financial markets.[13]

IMF managing director Dominique Strauss-Kahn said Thursday the current global turmoil was the biggest financial crisis since the Great Depression of the 1930s. "There is no other institution but the IMF likely to work on the linkages between the financial sector and the real economy and that is really what today is at stake," he said. New Bank of Japan Governor Masaaki Shirakawa said Thursday the world could draw from the BOJ's experience of its own 1990s banking crisis, citing "innovative measures" such as prolonging the period of money market operations and accepting a wider range of collateral. If approved by the G7, the new guidelines could be in place later this year in an effort to avoid the kind of surprise losses incurred by many financial institutions when the U.S. subprime home loan market collapsed.[2] The IMFC statement welcomed the cooperation of the major central banks in helping to stabilize the financial markets. It called on major financial institutions to declare their losses and raise new capital promptly to help rebuild market confidence. In response to a question on currency, Strauss-Kahn said the IMF is 'concerned' about global imbalances, and said currency regimes are a 'large part' of this problem. The IMF defended its downgraded forecasts for growth in the United States and the world. Earlier in the week, a senior U.S. Treasury official dismissed the IMF forecast as 'unduly pessimistic.' The IMF cut its forecast for U.S. GDP growth by a full percentage point to 0.5 pct growth for 2008, and reduced forecasts for most other major economies as well.[14] Wholesale money markets in America and Europe have seen a drying up of liquidity as banks fear to lend to each other. Where there should be consensus on the role and credibility of the IMF to help tackle these problems, there is little in evidence. The run-up to this year's spring conference has been marred by charge and counter-charge over the IMF's failure to recognise the severity of the crisis that has unfolded. Only this week, after months of evident trauma in financial markets, has the IMF sonorously declared that the crisis "has developed into the largest financial shock since the Great Depression". It now admits to being "humbled" in failing to recognise how bad things are, but says there has been a "collective failure to appreciate the extent of the leverage taken on by a wide range of institutions and the associated risks of a disorderly unwinding". The IMF's managing director, Dominique Strauss-Kahn, has waded in, saying the United States refused to adopt its programme to improve the stability of national economies. About two-thirds of IMF member countries chose to take part in a Financial Sector Assessment Programme, a joint World Bank-IMF initiative set up in 1999 to help alert member countries to vulnerabilities in their financial systems. "What is interesting," says Strauss-Kahn, "is that, until a few weeks ago, the U.S. has refused to have an FSAP. We can't be held responsible for lack of supervision''' owing to the fact that our main instrument to make that kind of supervision was not used in this country."[4] The International Monetary Fund on Thursday rejected claims that it should have better foreseen the onset of a global financial crisis and instead singled out the U.S. for refusing to adopt its ''programme to improve the stability of national economies. Dominique Strauss-Kahn, IMF managing director, said the U.S. had initially declined to sign up to the Financial Sector Assessment Programme, a joint IMF-World Bank initiative established in 1999 to help alert member countries to vulnerabilities in their financial systems.[15] America's mortgage crisis has spiraled into "the largest financial shock since the Great Depression" and there is now a one-in-four chance of a full-blown global recession over the next 12 months, the International Monetary Fund warned today. The U.S. is already sliding into what the IMF predicts will be a "mild recession" but there is mounting pessimism about the ability of the rest of the world to escape unscathed, the IMF said in its twice-yearly World Economic Outlook. Britain is particularly vulnerable, it warned, as it slashed its growth targets for both the U.S. and the UK. The report made it clear that there will be no early resolution to the global financial crisis.[16]

The G7 finance ministers and the boards of the World Bank and International Monetary Fund (IMF) meet in Washington this weekend to share a similar story: Central bankers are trapped in the middle of rising inflation and slowing growth, unable to soften one without exacerbating the other. In January, the IMF predicted global economic growth of 4.2% this year; prior to this weekend's gathering they revised this figure to 3.7%.[17] Financial leaders from around the world are converging on Washington for meetings of the International Monetary Fund (IMF) and the World Bank April 12-13 against the backdrop of growing concerns about the global economy.[18] The governing body of the International Monetary Fund is meeting Saturday in Washington to discuss a weakening global economy, inflation and proposals to stabilize financial markets still reeling from bank losses stemming from the U.S. home mortgage crisis.[19] WASHINGTON, April 12 (Reuters) - Financial leaders on Saturday urged the International Monetary Fund to sharpen its oversight of the global economy, which is burdened by surging food prices and a credit crisis that shows no end in sight. As rich countries struggled to get a handle on financial turmoil that has rocked markets for nine months and worried the U.S. dollar may have fallen too far, emerging and developing nations wondered how much they would be spared from a crisis that may have already pushed the U.S. economy into recession.[20]

WASHINGTON (Thomson Financial) - The financial crisis facing the world economy demands'strong action' and 'close cooperation' among the world's financial powers, the International Monetary Fund said today. 'The global crisis has to be addressed with a global view and by strengthening the role of multilateral institutions,' Tommaso Padoa-Schioppa, chair of the the International Monetary and Financial Committee (IMFC), the IMF's top policy-making body, told reporters in a briefing this afternoon.[14] The IMF stressed that "the challenges facing the world economy are of a global nature, requiring strong action and close cooperation among the membership''. The statement by the IMF's policy-making International Monetary and Financial Committee (IMFC) underscored that since its last meeting six months ago, global financial instability had increased, economic growth had slowed and growth prospects for 2008 and 2009 had deteriorated.[21] The Committee met at a time of unusual uncertainties surrounding global economic and financial market prospects. It stresses that the challenges facing the world economy are of a global nature, requiring strong action and close cooperation among the membership. The Committee is confident that the key reforms recently agreed by the Fund's Executive Board, including the strategic refocusing of the Fund on its core mandate based on its comparative advantage, will strengthen the Fund's role in promoting global financial stability and international monetary cooperation and in serving its universal membership effectively at this critical juncture. The Committee notes that global financial instability has increased since its last meeting.[22]

Members of the International Monetary and Financial Committee (IMFC), the Fund's primary advisory body, met to discuss how to handle the deteriorating growth prospects for the global economy, the still unfolding events in financial markets, and the growing threat of rising inflation in some economies.[23]

The Committee underscores that continued close Fund collaboration with the Financial Stability Forum (FSF), the Bank for International Settlements, standard-setting bodies, and national authorities will be essential to ensure that the lessons from the crisis are effectively shared and that agreed policy actions are rapidly implemented. The Committee welcomes the policy recommendations by the FSF and calls for their timely implementation; it also emphasizes the importance of strengthening the Fund's financial surveillance role, including through the Financial Sector Assessment Program, and its capability to identify risks in the future. The Committee will review further progress on these issues at its next meeting. Emerging market and developing countries have so far continued to grow strongly and show resilience in the face of the ongoing financial crisis, though their growth prospects have moderated and inflation risks have increased.[22] In the Untied States, temporary fiscal easing will help to counter downside risks to growth, it added. It said that emerging market and developing countries have so far continued to grow strongly and show resilience in the face of the ongoing financial crisis, though their growth prospects have moderated and inflation risks have increased.[9]

IMF Managing Director Dominique Strauss-Kahn has said the notion of decoupling between north and south was misleading. He said the risks to global financial stability were rising, not only because of the credit and housing crisis in the U.S., but because of growing risk aversion, with higher financing costs and a sharp decrease in capital market flows to emerging markets. Another risk of key concern he said, is sustained high inflation, fuelled by high commodity prices.[24] The IMF Global Financial Stability Report announced that the U.S. housing market crisis has affected financial institutions in other countries, leading to global losses on a very large scale. It said that the credit crunch began in the U.S. eight months ago after banks suffered huge losses due to rising defaults on sub prime or high risk home loans.[25] "It's probably not since the 1930s that you've seen these kinds of asset price declines in the United States." It might seem alarming then that he admits the IMF needs to be ready to lend out emergency funds if the crisis heightens. "This is the first major stress test of a globalised securitised financial system, and the Fund's role is going to be an active one but not in the way that it has been in the past because we've never before been confronted with exactly this set of circumstances. "That's not to say you couldn't imagine that this won't turn into more classic Fund-style payments crises that would require action. It could happen and we'd have to be ready." Though he adds that we're not quite there yet, the acknowledgement will fuel fears that the IMF may have to lend money to the countries stricken by the crisis. In its Global Financial Stability Report last week, the Fund identified a clutch of countries in Eastern Europe which looked highly vulnerable. Other experts have issued warnings over Iceland, whose krona has plunged so dramatically that the central bank was forced to raise interest rates.[26]

Finance ministers and central bank governors of the G7 major industrialized countries will discuss an international plan to reinforce the global financial system aimed at preventing a recurrence of what has been called the worst financial crisis since the 1930s Great Depression.[2] Friday, April 11, 2008 5:48:35 AM - Group of Seven financial chiefs gather in Washington on Friday in a bid to stave off what the International Monetary Fund-IMF warned earlier this week was the worst financial crisis since the 1930s Great Depression. During their meeting, finance ministers and central bank governors from the richest nations will seek to firm up proposals for tightening scrutiny of global banking practices and to press the private sector to step up its efforts to settle financial markets.[27] Washington, DC (AHN) - The annual gathering of finance experts to tackle global economic problems takes place this weekend in Washington. The Group of Seven finance ministers' meeting is slated for Friday, while the governing boards of the International Monetary Fund and World bank have their own gatherings on Saturday and Sunday.[28] WASHINGTON, April 13 (Itar-Tass) -- One should be very careful with the possible development of a Russian economic mega-regulator, Vice-Premier and Finance Minister Alexei Kudrin said in comments on the spring session of shareholders of the International Monetary Fund (IMF) and the World Bank. He led the Russian delegation to the meeting.[29]

A new "multilateral consensus" is needed to help head off a global economic slowdown and recession, the head of the United Nations International Labour Organization (ILO) has told the International Monetary Fund and the World Bank. Speaking at the annual spring meetings of the two Washington-based institutions, ILO Director-General Juan Somavia also called for closer ties between his agency, the IMF and the World Bank.[30] The 185-member IMF, set up to oversee the reconstruction of Europe after World War II, warned Wednesday that the economic outlook was increasingly grim, with the United States in a recession from a housing meltdown whose effects are still spreading. Global expansion would slow to 3.7 percent in 2008, it said, cutting earlier forecasts and warning there was a 25 percent chance growth would fall further to leave the world effectively in recession this year and next. The risks growth remain "tilted to the downside," it said in its biannual World Economic Outlook report prepared for its spring meetings with the World Bank in Washington on Saturday and Sunday.[7]

"Based on a rough analysis, we estimate that a doubling of food prices over the last three years could potentially push 100 million people in low-income countries deeper into poverty," World Bank president Robert Zoellick said at the end of the anti-poverty development lender's meeting Sunday. "This is not just a question about short-term needs, as important as those are. This is about ensuring that future generations don't pay a price too." "As we know, learning from the past, those kind of questions sometimes end in war," IMF head Dominique Straus-Kahn warned Saturday. Zoellick also said the bank's steering committtee had endorsed his proposed "New Deal" for global food policy, similar in scope to a 1930s program under U.S. president Franklin D. Roosevelt to tackle the problems of the Great Depression.[31] The World Bank estimates that the doubling of wheat prices in the last year could erase the gains in reducing poverty that Yemen made between 1998 and 2005. The developing countries represented at these meetings are raising their concerns forcefully. They clearly had a sympathetic hearing from the IMF's chief, Dominique Strauss-Kahn. He said that if food prices go on rising, hundreds of thousands of people will be starving and children will suffer from malnutrition. It could lead to conflict, and undermine the legitimacy of governments. It is strong language and the IMF might be able to provide some practical help too. It has a lending facility that could probably be used to help countries adapt to higher food prices. It cannot fix the underlying fact that food is expensive.[32]

Haiti's government fell on Saturday after senators fired Prime Minister Jacques Edouard Alexis following a week of food riots. Developing countries called on the IMF and World Bank to stand ready with emergency funding to help the poorer nations of the world in case financial market woes spread to their economies and the food crisis worsened.[5] Countries also fretted over increasing prices for food and other commodities, and related shortages of key staples that have fueled protests in Asia, Africa and Latin America. They called on the IMF and World Bank to stand ready with emergency funding to help the poorer nations of the world in case financial market woes spread to their economies and the food crisis worsened.[20]

The IMF board will concentrate on regulations of financial markets, while the World Bank's board will focus on inflation, especially related to food prices, The Washington Post reported.[33] WASHINGTON (AFP) — Rising food prices could have terrible consequences for the world, including the risk of war, the IMF has said, calling for action to keep inflation in check. "Food prices, if they go on like they are doing today. the consequences will be terrible," International Monetary Fund managing director Dominque Strauss-Kahn said.[12] The report said that financial conditions were '''beginning to show some signs of tightening.''' Reuters adds that '''''' The one overriding risk is increased inflation pressures, especially from food prices, the IMF said in its regional economic outlook report. '''In this situation, where we have shocks from external sources such as food prices, the main priority is to avoid these getting either entrenched or entering wage negotiations,''' IMF Western Hemisphere director Anoop Singh told reporters.[30] A number of emerging and developing economies face rising inflationary pressures, driven by soaring food and energy prices. That makes conditions more complicated and policymakers more difficult to balance the risks of economic slowdown and rising inflationary pressures. "In the emerging markets, headline inflation has risen more markedly, reflecting both strong demand growth and the greater weight of energy and particularly food in consumption baskets," the IMF pointed out in its latest World Economic Outlook report. For this year and 2009, emerging and developing economies are expected by the IMF to expand 6.7 percent and 6.6 percent respectively, down from a 7.9 percent pace in 2007.[1]

"In the advanced economies, monetary policy should continue to aim at medium-term price stability, while responding flexibly to signs of a more pronounced and prolonged economic downturn," it said. The IMF recently trimmed its growth estimate for Japan to 1.4 percent for 2008 and 1.5 percent for 2009, down 0.1 and 0.2 percentage point, respectively, from its previous forecasts released in January. The committee noted that global financial instability has increased since its previous meeting last fall.[34] With reforms nearly done, financial leaders said it is time for the IMF to focus on financial stability. Even as ministers called for more IMF attention to policing the global crisis, advanced countries complained its growth forecasts for 2008 and 2009 were overly pessimistic. "I think it's useful that the fund took a very dry and realistic view of the situation," Padoa-Schioppa said in defense of the IMF.[5] The steering committee backed proposals to reform the quota and voting-power system at the fund, as well as the IMF's income model. Strauss-Kahn said he is "much more confident" that by April 28 the proposals will receive the support of the 85% of IMF voting shares required for formal adoption. The institution, he said, then can devote all its time to the global financial crisis and the challenge of rising commodity prices.[13] With the IMF Board of Governors poised to approve long-debated reforms of the institution, the fund has been pushing for new relevance as a watchdog of the global financial system. Strauss-Kahn said he sensed increased support for a bigger role by the institution in Saturday's discussions. "What was obvious this morning is that there is kind of a revival of the multilateral spirit - the idea that we are facing global problems, and that to those global problems there must be global answers," he said.[13]

In addition to offering analyses and policy recommendations on the global economy, the IMF and World Bank will address proposals for internal reform with the intention of giving emerging market countries and poorer countries greater say in running the IMF. IMF Managing Director Dominique Strauss-Kahn said the IMF executive board favors a reform proposal for the IMF to adjust its structure to the "dynamic and changing realities of the global economy." "We are creating a more flexible system. which involves further changes over time as the relative positions of countries in the world economy evolve," he said.[18] A new look at the global economy shows the U.S. is not alone when it comes to a possible recession. It expects the U.S. will not avoid a "mild" recession. In its World Economic Outlook, the IMF cut projections for the U.S., projecting growth to slow to just half a percent this year -- the worst showing in 17 years. Many economists believe the nation already has fallen into its first recession since 2001. In addition to problems in America, the IMF expects the world economy to lose considerable momentum this year.[35] Calling the weekend meetings with the IMF "an important crossroads for the global economy," Lagardere said it was the responsibility of the finance ministers "to cooperate to restore confidence and enhance the resilience of the financial system." Global expansion is set to slow to 3.7 percent in 2008, half a point lower than its January estimate, and the U.S. economy is likely in a "mild recession" and will stagnate through much of 2009, the IMF said Wednesday in its semiannual World Economic Outlook report.[2] Worries about a global slowdown as the U.S. subprime crisis continues to batter the world's biggest economy and send global financial markets into a tailspin. Global expansion is set to slow to 3.7 percent in 2008, half a point lower than the IMF's January estimate, and the U.S. economy is likely to be in a "mild recession" and will stagnate through much of 2009, the IMF said Wednesday in its semiannual World Economic Outlook report.[27]

Learn how to maintain seamless business continuity while migrating from traditional voice mail, to unified communications. The IMF said in its semiannual Global Financial Stability Report released Tuesday that the deepening U.S. subprime mortgage crisis could cost the global financial system close to $945 billion, far bigger than earlier-projected figures. During the meeting, the IMFC discussed reforms of the IMF, including changes in its governance structure and measures to put its finances on a more sustainable footing.[34]

Are sovereign wealth funds the cash-rich superheroes that will come to the rescue of struggling financial institutions in Europe and the United States? Or are their investments a slow-acting problem that will eventually drain away the West's financial prowess? It's a philosophical question that the recipients of the SWF money can't afford to answer right now. Since last November, as the credit crunch continued to roil markets, global banks have reported losses of $193-billion (U.S.), the International Monetary Fund reports in its latest report on global financial stability.[36] The International Monetary Fund recent Global Financial Stability Report is just the latest to talk about a "widening and deepening fallout" from the subprime mortgage meltdown and subsequent credit crisis.[37]

Weekend meetings of the Group of Seven leading nations, the World Bank and the International Monetary Fund provided no joint emergency plan to quell the crisis now gripping global financial markets. International officials embraced coordinated measures that they hope will help prevent future crises, but left each country to deal with its own immediate turmoil in its own way. In a rare move, G-7 leaders issued a blunt warning to financial markets Friday that they won't sit by and watch the dollar continue to slide against other big currencies. They also reiterated their demand that Beijing.[38] WASHINGTON (AFP) — The International Monetary Fund holds its spring meeting here Saturday amid what officials describe as the worst financial crisis since the 1930s Depression and as the global economy weakens.[7] Financial analysts said Turkey's new agreement alternatives with the International Monetary Fund (IMF) are likely to be a "difficult" test for the country, Anatolian Agency reported on Sunday. The post-stand-by deal alternatives, explained by the Turkish State Minister Mehmet Simsek prior to his departure to Washington ]] Washington to attend IMF-World Bank spring meetings, were evaluated as "difficult" by analysts.[39] WASHINGTON -(Dow Jones)- The Chilean government's plans to issue the equivalent of $1.2 billion in local-currency debt this year will help reduce pressure on the peso, according to the country's representative to the International Monetary Fund. "By providing funding in local currency, the authorities are avoiding the need to liquidate the U.S. dollar in the local currency markets and in turn, they are alleviating the pressure on the exchange rate," said Martin Lousteau, Argentina's finance minister. As well as representing his own country at IMF, Lousteau represents a number of other countries including Chile.[40] The Finance Ministers and Central Bank Presidents of the seven richest industrial democracies are exploring ways to restore confidence in the world's money markets. This weekend, the 185-nation International Monetary Fund will meet. They say losses to major financial institutions over the next two years could approach one trillion dollars.[41] "Tens of thousands of people will be starving,'' Mr. Strauss-Kahn said. He didn't elaborate on what might be done to either reverse the price increases or ease the pain of soaring grain and energy costs. The fund's steering committee, led by Italian Finance Minister Tommaso Padoa-Schioppa, added to the dour assessments of the world economy by IMF staff earlier this week and G7 finance ministers and central bank governors yesterday.[10] "India has become more and more a big player in the world economy," International Monetary Fund (IMF) managing director Dominique Strauss-Kahn said at a press conference Saturday after a meeting of the Fund's primary advisory body.[42]

The International Monetary Fund's deputy head and one-time leading investment banker has fast become a key player in the behind-the-scenes race to bring the crisis to an end and to ensure it never happens again. In a rare interview on the fringes of the IMF and G7 meetings over the weekend, the former JP Morgan vice-chairman doesn't mince his words about the scale of the trauma. This is, he says, the worst financial crisis since the Great Depression: "You've seen the sudden deterioration of perceived credit quality of financial institutions around the world; you've seen the sudden failure of major institutions. I don't think you would find anything quite like this on this kind of scale.[26] The G7 proposals are usually accepted by the IMF's governing board. On Friday evening, U.S. Treasury Secretary Henry Paulson hosted a meeting of his colleagues from Europe, Canada and Japan along with commercial bankers impacted by the current credit squeeze, the world's most significant financial turmoil since the Asian financial crisis 10 years ago. Addressing the IMF panel on Saturday, Paulson said the first six months of 2008 will be difficult for the U.S. economy, which may have already entered its first recession since 2001. Paulson is calling on the 185-member-nation IMF to sharpen its focus on currency exchange rates and to more closely monitor financial markets. These weekend meetings are the regular semi-annual gatherings of the IMF's governing panel, whose developing country members - among others - include China, India, South Africa, Saudi Arabia and Venezuela.[19] In China, 9.3% growth, or Russia, 6.8%, policymakers are more worried about inflation than recession. As for Britain, the IMF's forecast of 1.6% growth for this year and next is stronger than America, plainly, but also outstrips Germany, France, Italy and Japan. It may not be a great prize to win, but over the next two years Britain will vie with Canada to be the strongest-growing economy in the G7. That does not fit the description of a country acutely vulnerable to the credit crisis.[43]

The recommendations of the Financial Stability Forum (FSF) also include reforming the ratings agencies which grade corporate debt and overhauling the way bankers' bonuses are calculated. It's a sensitive point for the bankers and financiers who in a report from the International Institute for Finance last week issued a mea culpa for the credit crisis. They had been desperately hoping not to be slapped down with a raft of new regulations, and at a dinner with G7 finance ministers on Friday night they still seemed reluctant to countenance new restrictions, arguing that such rules would constrict wider economic growth in the years ahead. Despite his close ties with the financial community, Lipsky concedes that more financial regulation is inevitable. "It's almost certain that there should be a regulatory response," he says. "Has this demonstrated weaknesses in regulation and supervision? The answer has to be 'yes'.[26]

"While economic conditions differ in our countries, downside risks to the outlook persist in view of the ongoing weakness in U.S. residential housing markets, stressed global financial market conditions, the international impact of high oil and commodity prices, and consequent inflation pressures." The G7 finance chiefs also noted that since their last meeting in February, there have been "sharp fluctuations" in major currencies and members "continue to monitor exchange markets closely and cooperate as appropriate."[7] "Policy-makers should continue to respond to the challenge of dealing with the financial crisis and supporting activity, while making sure that inflation is kept under control," the International Monetary and Financial Committee said in a post-meeting communique. As rich countries struggle to get a handle on financial turmoil that has rocked markets for nine months and worry the U.S. dollar may have fallen too far, emerging and developing nations wondered whether they would be spared from a crisis that may have already pushed the U.S. economy into recession.[5] The International Monetary and Financial Committee urged Tokyo to make further progress on "structural reforms, including fiscal consolidation." Japan and other advanced economies have experienced financial turbulence resulting from the U.S. subprime mortgage crisis and their growth rates have declined, the panel said in a communique issued after its one-day meeting.[34]

"A number of developing countries, especially low-income countries, face a sharp rise in food and energy prices, which have a particularly strong impact on the poorest segments of the population," the 24-member International Monetary and Financial Committee said in a statement at the end of a meeting today in Washington.[10] WASHINGTON (AP) — The head of the International Monetary Fund warned Saturday that if food prices remain high, there will be dire consequences for people in many developing countries, especially in Africa.[6]

WASHINGTON (AFP) — World economic leaders here this weekend took steps to alleviate the worst financial shock in decades and a food price crisis that is sparking deadly unrest in developing countries.[31] The IMF said developing countries have shown resilience to the financial crisis but face a sharp rise in food and energy prices.[44] "Not," says Niven, "the IMF prescribed medicine of a decade ago''' The IMF, and policymakers, learned many lessons from the Asian crisis and many would now argue that the measures used a decade ago to'solve' the crisis in developing countries were, in reality, in real danger of 'killing the patient'. The real irony, however, is that the current crisis arguably has at least part of its roots in the IMF policies of a decade ago which led to many developing economies swearing that they would never again go cap in hand to the Fund and be beholden to external parties in the time of a crisis. This determination to build huge foreign reserves in Asian economies led, in part, to depressed interest rates in the U.S. and fuelled reckless mortgage lending there. The seeds for the next bubble, boom and subsequent bust," he warns, "may well be being sown amidst the current gloom."[4]

While the SWF money may not be enough to completely save U.S. and European financial institutions from their exposure to the subprime meltdown, it has been an important source of stability during a time of marked volatility, the IMF says. "Given their typically long time horizon and limited liquidity needs, SWFs can have a shock-absorbing role, at least in terms of abating short-term market volatility," the report said. They point to credit default spreads on big investment banks. These widely traded credit derivatives are a proxy for what the market believes the banks' chances of failure are. Those spreads settled down markedly after the banks received capital injections fuelled by SWF money. What have they gotten themselves into? There's a concern that the funds invest for the economic and strategic welfare of their own countries, and aren't aimed necessarily at profit maximizing.[36] The IMF emphasized that the numbers are estimates. They are similar to those of a growing number of private analysts, such as those at Moody's Economy.com and Goldman Sachs, who have also estimated losses in the trillion-dollar range. The IMF report shows that predictions of such losses, which were extreme outliers a few months ago, have become mainstream. Already, banks and other financial institutions that report publicly have marked down the value of their assets by about $200 billion. Hedge funds and other investment vehicles that do not have to disclose their losses have probably also recognized significant losses. The report indicated that by mid-March, U.S. banks had reported 'most of their estimated losses,' with European banks now catching up. The ultimate scale of losses could end up to be more manageable; estimates such as those prepared by the IMF can swing wildly depending on assumptions such as where home prices will settle and how many people will walk away from mortgages they cannot afford.[3]

The report blamed the losses on a 'collective failure to appreciate the extent of leverage in the financial system and the associated risks of disorderly unwinding'. The IMF also warned of the risk of 'a serious funding and confidence crisis that threatens to continue for a significant period', adding that non-bank financial institution losses around the world could result in a surge in its estimates. The report comes ahead of a Washington meeting of IMF finance ministers and central back governors this weekend.[25] WASHINGTON (AP) — Finance ministers and central bankers are focusing their spring meetings on ways to deal with the unfolding financial crisis that has roiled economies around the world and led to higher food and energy prices.[45] WASHINGTON (Reuters) - Finance ministers and central bankers from around the globe are in Washington this weekend for the Spring meetings of the International Monetary Fund and World Bank.[46] Kudrin met with several U.S. officials, including U.S. Trade Representative Susan Schwab, while in Washington for the annual spring meetings of the International Monetary Fund and World Bank.[30]

The Group of Seven industrialized countries set the alarmed tone on the eve of the annual spring meetings of the 185-nation International Monetary Fund and its sister institution, the World Bank.[31] Washington - The International Monetary Fund's steering committee directed the fund and its sister organization, the World Bank, to work together to ease the burden of surging commodity prices on poorer countries.[10] Sessions of the International Monetary Fund and World Bank end Sunday with a look by the bank's policy-setting committee at the effect on developing countries, especially poor ones where the bank is trying to reduce poverty.[45]

The 185-nation International Monetary Fund and the World Bank readied for weekend discussions following talks among the world's seven richest industrial countries. This content is for your personal use only, subject to Terms and Conditions.[47]

Los Angeles, California. The panel is confident that the key reforms, recently agreed on by the IMF's Executive Board, "will strengthen the Fund's role in promoting global financial stability and international monetary cooperation and in serving its universal membership effectively at this critical juncture," the communique said.[34] According to an August 2007 IMF document on the U.S. economy, Treasury agreed to start an FSAP in late 2009. By the end of April, the IMF’s 185 member countries will vote on its reforms, putting the IMF in better stead to focus on its mission of ensuring global financial stability.[11] The committee, which has just backed plans to reform the IMF, is chaired by Tommaso Padoa-Schioppa. "The discussion on global economy and financial markets reflects what is the mood in this moment, the sense that the chain of bad news may not have come to an end," he said.[48] The panel welcomed the agreement by the Executive Board on the realignment of IMF member quotas and voting shares as "an important contribution to enhance the Fund's credibility and legitimacy." The overhaul, based on the members' weight and role in the global economy, is designed to enhance the participation and voice of emerging-market and low-income countries in the IMF. It also endorsed the IMF's efforts to bring its debt-plagued finances back into line, including a new income model and a new medium-term budgetary framework, which reduces net spending by 13.5 percent in real terms over the next three years.[34] The fact that Britain is seen to be growing more strongly than Europe is also hard to square with sterling's slide against the euro, though the single currency's strength will be a constraint on euroland growth. It could be, of course, that the IMF is still too upbeat on the global economy. Simon Johnson, its chief economist, conceded last week that it had been last year but maintained that the organisation had learnt a lot about the effect of the crisis. Certainly there is no indication in its report that it has tried to minimise the impact.[43] Simon Johnson, IMF director of research, said the subprime mortgage housing crisis in the United States has brought economic growth in the world's largest economy nearly to a standstill. The U.S. economic turmoil, he added, has prompted the IMF to lower its projection for global growth in 2008 to 3.7 percent, well below its earlier prediction of 4.9 percent.[18] The meetings comes on the heels of the release of IMF's global outlook which had projections of slower economic growth rates for many countries, including a forecast that the U.S. would enter recession.[28] America's economy shrank by some 32% over the 1929-32 period. Its prediction for the next couple of years is growth of 0.5% and 0.6% respectively. That is uncomfortably weak for Americans, but implies only a mild recession. This is also true of the IMF's global forecast. Five years ago, when the Iraq invasion appeared to have gone well, its world economic outlook was upbeat.[43] With the credit squeeze still spreading, the IMF recently warned that the U.S. economy, the world's biggest, was entering a recession and world growth was deteriorating so sharply a global recession was also in view.[31] The IMF projects that growth in the advanced economies generally is expected to "fall well below potential" and that the U.S. economy, the biggest one in the world, will "tip into a mild recession in 2008" as the result of mutually reinforcing cycles inthe housing and financial markets before starting a modest recovery in 2009.[1]

IMFC met Saturday as part of the IMF-World Bank Spring Meetings to discuss how to handle the deteriorating growth prospects for the global economy, the still unfolding events in financial markets, and the growing threat of rising inflation in some economies.[42] Faced with a slowing world economy, continued market turmoil, and increased inflationary risks, financial leaders at the IMF-World Bank Spring Meetings urged strong action to counter the slowdown, and supported the Fund's efforts to step up analysis of global threats while welcoming successful measures to reform the multilateral institution.[23]

Earlier, addressing the IMFC, Chidambaram had urged policy makers and central banks to carefully balance growth and financial stability considerations with the potential risks to price stability. Describing the emergence of global inflationary pressures as "another worrisome development", he said: "The deflationary impact of globalisation seems to have run out with increasing wage and inflationary pressures."[42] Recommendation is a "gentle word," said Bank of Italy governor Mario Draghi, who also chairs the Financial Stability Forum that made the proposals. "In fact some of these recommendations are actually policy decisions." The sudden nosedive in the global economy after several years of robust growth "even six months ago would have been unthinkable," he added.[31]

WASHINGTON (AFP) — Group of Seven finance chiefs meet here Friday to tackle a financial market crisis, a slumping global economy and rising inflation, under pressure to replace words with concrete action.[2] In three days of meetings that ended Sunday, finance ministers and central bankers grappled with the credit squeeze and inflation emergencies against the backdrop of an apparent U.S. recession and a sharply slowing global economy.[31]

IMFC chairman Tommaso Padoa-Schioppa said at a press conference that there was a sense in the meeting that the string of bad news about markets and the global economy had not come to an end and that "a global crisis has to be addressed by a global institution" like the 185-member IMF.[23]

"The global crisis has to be addressed with a global view and by strengthening the role of multilateral institutions," Tommaso Padoa-Schioppa, chair of the the International Monetary and Financial Committee (IMFC), the IMF's top policy-making body, told reporters in a briefing.[12] International Monetary Fund managing director Dominique Strauss-Kahn said Thursday that the current global turmoil is the biggest financial crisis since the Great Depression of the 1930s. "But it is a new kind of crisis," he said at a news conference.[27] Strauss-Kahn said the way Indian Finance Minister P. Chidambaram underlined the problem of the increase in food prices, of the consequences it may have, had impressed everybody in the International Monetary and Financial Committee (IMFC). "He was then followed by many ministers referring to his first speech and approving what he has said," Strauss-Kahn said. "So, I think Chidambaram takes the lead on this question, and it is following his question and his proposal that we are going to work in the coming weeks."[42]

WASHINGTON, April 12 (Reuters) - Europe should consolidate its seats on the International Monetary Fund board, though scaling down to a single chair may not be the best plan, the head of the IMF's International Monetary and Financial Committee said on Saturday.[49] U.S. Treasury Secretary Henry Paulson warned of "more bumps in the road." "It took time to build up recent excesses and it will take time to work through the consequences," he told the IMF's policy-setting International Monetary and Financial Committee.[20] The remarks were made Saturday to the IMF's policy steering committee, the International Monetary and Financial Committee.[40]

World oil demand will rise much less than expected in 2008 because of slower economic growth in the United States and elsewhere, the International Energy Agency (IEA) said on Friday. The cut to demand growth is the IEA's biggest since 2001 and follows the release of lower economic growth forecasts by the International Monetary Fund (IMF) this week, and the impact of high oil prices above $110 a barrel.[30] ZURICH: The International Monetary Fund (IMF) cut its 2009 growth outlook for the Swiss economy to below 1 per cent, according to the World Economic Outlook published over the weekend.[50] Total trade stood at US$570.4 billion in the first quarter, up 24.6% from the previous year. The International Monetary Fund, or IMF, expects Chinese economic growth to slow to 9.3% in this year from 11.4% recorded in 2007.[27]

WASHINGTON - After three distracting years modernising the International Monetary Fund (IMF), its head Dominique Strauss-Kahn declared yesterday “the IMF is back” even as criticisms of the changes lingered.[11]

Chavez raised that idea with a chuckle as the IMF, the lender of last resort for countries in trouble, considers trimming costs by selling off some of its gold reserves. "Look at how the U.S. empire must be in unimpeded decline, that the International Monetary Fund. is selling its crown jewels," Chavez said during a speech at a military parade.[51] The G24 said Friday in a communique that coordinated international action is needed to prevent the emergence of a larger crisis and agreed the International Monetary Fund (IMF) has an important role in responding to the current crisis.[30] The International Monetary Fund called today for "strong action" and "close cooperation" to combat the financial crisis battering the world economy.[21]

Escalating inflation is complicating the already complex challenges of a global financial crisis battering the world economy, Strauss-Kahn said.[12] "Policymakers should continue to respond to the challenge of dealing with the financial crisis and supporting activity, while making sure that inflation is kept under control," said the IMF, whose core mission is to promote global financial stability.[31] The Committee sees the ongoing work in several fora aimed at managing and drawing lessons from the financial turmoil as a key step to strengthen the stability of the global financial system and to reinforce the supervisory and regulatory frameworks. It welcomes the Fund's work in these areas, notably the Global Financial Stability Report and the report prepared by the IMF on The Recent Financial Turmoil: Initial Assessment, Policy Lessons, and Implications for Fund Surveillance.[22] "Further prompt actions by large financial institutions to disclose losses and repair balance sheets by raising capital when needed and mobilising mediumrm funding will contribute to restoring confidence.'' The IMF hailed the ongoing work by groups such as the Financial Stability Forum (FSF) aimed at managing and drawing lessons from the financial turmoil. That effort is "a key step to strengthen the stability of the global financial system and to reinforce the supervisory and regulatory frameworks''.[21]

"While each country's situation is different, coherent action must be taken,'' said the 185-nation institution, whose core mission is to promote global financial stability. That action should be "timely'', it said, welcoming the recent moves by the central banks of the advanced economies to provide liquidity support to ease strains in the credit markets.[21] The Financial Stability Forum includes representatives of 26 entities including central banks, the IMF and World Bank, and market regulators from the large economies. It is based at the Bank of International Settlements in Switzerland.[2]

The committee urged the IMF to work closely with the World Bank and other partners in an integrated response through policy advice and financial support. It also reiterated its strong support for a prompt and ambitious conclusion of the Doha Developing Round of trade negotiations.[9] Topping the agenda of the G-7 and IMF meets are reviving the financial markets and addressing global hunger for the World Bank.[28]

The clear inference is that if the IMF had been called upon to comment on U.S. credit markets, it would have identified the problems and demanded action. Is this a credible defence? According to Stephen Lewis, economist at Isinger de Beaufort, Strauss-Kahn's case gains no credibility at all when considering the IMF's approach to the UK, a longstanding participant in the FSAP. The last published assessment was in March 2003, long before the global explosion in structured financial products. It concluded, "the quality and effectiveness of financial sector supervision in the UK is strong in the banking area". Another, more recent IMF consultation under Article IV on aspects of economic and financial policy suggested no cause for concern.[4] The U.S. did eventually agree to participate in the IMF's program, but too late for anything to be done about our current monetary crisis, which is having global repercussions. There could be any number of reasons for the U.S. initially declining to take part, but it seems likely that one reason is that some powerful people in the U.S. financial community didn't want the IMF looking over their shoulders while they bundled questionable sub-prime mortgages into something resembling sound investment opportunities, thereby affording themselves a chance to make huge profits short-term by selling gift wrapped garbage, knowing full well that the practice would never hold up to IMF scrutiny, and that it was a disaster in the making for everyone but themselves.[15] The IMF estimated the crisis would cost the global financial system nearly one trillion dollars. The IMF on Saturday wrapped up its meeting with a call for "strong action and close cooperation" to combat the financial crisis.[31] IMF managing director Dominique Strauss-Kahn said Thursday the organization would play a key role in confronting the global financial crisis.[7] Strauss-Kahn said the global financial turmoil that originated in rising defaults in the U.S. on subprime mortgages and roiled markets in August was the biggest financial crisis since the Great Depression of the 1930s.[7]

"The financial market crisis that erupted in August 2007 has developed into the largest financial shock since the Great Depression," it said, and there was now a one-in-four chance of a global recession, something it had dismissed last year as barely worth mentioning. It calculates that global losses from the credit crisis will hit $945 billion (£480 billion).[43] The financials chiefs will review a plan drafted by a global group, the Financial Stability Forum, for calming a market crisis that has triggered a tsunami across the globe since last summer with global loses estimated to go up as much as $1 trillion. The plan recommends banks and securities firms to be more transparent in their dealings and boost capital reserves as part of improved risk management to avert future crises. It also requires credit rating firms to differentiate their ratings for complex securities and provide more information about how they come up with their ratings.[27] The finance experts are likely to seek ways to further strengthen regulation of banks to reduce risks to the global financial system. They will likely adopt recommendations of an international group of bank regulators for banks to be more transparent with their information and for government institutions to have better coordination and response to risks.[28]

Meeting yesterday, the finance officials spent the largest share of their time talking about the financial crisis before endorsing a series of recommendations made by the Financial Stability Forum, an international group of bank regulators and other financial experts.[30]

Confronted by what the IMF head says is the worst financial crisis since the 1930s Great Depression, finance chiefs from Britain, Canada, France, Germany, Italy, Japan and the United States decided only greater transparency in the financial system could restore normalcy to the markets. The G7 endorsed recommendations from an international forum and set for some of them a deadline for implementation unprecedented in its brevity -- 100 days.[31] Strauss-Kahn fired back, saying the IMF should not be blamed for missing warning signs of the financial crisis because the United States rejected a banking regulatory and oversight method, a Financial Sector Assessment Program, or FSAP, the IMF has suggested. “The IMF has done extensive analysis of the U.S. financial system and regulations,” a U.S. Treasury spokesman said, “An FSAP is not the only vehicle for doing this,” he said.[11]

Strauss-Kahn appeared pleased with how IMF members were able to agree on topics ranging from IMF reform to tackling the financial crisis that is threatening growth around the world. He said there was 'kind of a revival of the multilateral spirit' in this week's meetings.[14] "The financial shock that erupted in August 2007, as the U.S. sub-prime mortgage market was derailed by the reversal of the housing boom, has spread quickly and unpredictably to inflict extensive damage on markets and institutions at the heart of the financial system," it said. After warning earlier this week that the world's financial firms could end up shouldering $1 trillion (''500bn) worth of losses from the credit crunch, the IMF said it expects the U.S. to achieve GDP growth of just 0.5% this year, and 0.6% in 2009, with the housing crash getting even worse.[16] The plan would also boost cooperation and information exchanges among central banks and market authorities, with cross-border meetings by the year-end. It also calls for central banks to have more flexibility by effectively pumping cash into the system when the financial system is under stress. If approved by the G-7 countries - as indications before Friday's meeting were that most G-7 members already accepted the proposals - the new guidelines could be in place later this year to avoid the kind of surprise losses incurred by many financial institutions when the U.S. real estate market turned downward.[27]

A Turkish delegation headed by Minister Simsek, currently in Washington D.C. to attend IMF-World Bank spring meetings, will also continue to the talks held in Ankara last week between the IMF delagation and high-level officials from Turkish Treasury, Finance Ministry, Central Bank and State Planning Organization.[39] The head of the United Arab Emirates' central bank, Sultan Nasser al-Suweidi, said the IMF's global reach made it uniquely positioned to consider lessons learned from the crisis.[20]

The voting power changes will complete a number of institutional reforms that have been in the works for years. With those reforms nearly complete, financial leaders said it is time for the IMF to focus on its core mission of ensuring global financial stability.[20] Paulson, who said an effective IMF was as important as ever to ensure stability of the global financial system, called on the fund to focus more intently on the alignment of the world's currencies and to move quickly to address dangers to market stability posed by rapidly expanding sovereign wealth funds.[20]

The IMFC acknowledged sovereign wealth funds offer "economic and financial benefits, including a stabilizing influence on financial markets." It also said the state-backed investment entities, many of them owned by emerging-market economies and oil-rich Middle Eastern countries, also pose "several challenges for policymakers," welcoming the IMF's initiative to develop a code of conduct for those funds.[34] Strauss-Kahn also appreciated Chidambaram's support for the quota and voice reform, and the income reform of the Fund. He and a long list of other ministers were "so happy of the reform and approving not only the result of the reform, but the fact that the Fund is moving". The proposed reforms seek to give emerging economies - India, China, Brazil, Mexico and South Korea - a little more voting power in IMF. The 185 member countries are expected to approve changes in their relative voting power later in April, although some nations that stand to lose from the shift - such as Russia, Argentina, Saudi Arabia, Iran and Egypt - oppose the move.[42] Eased access to IMF funds is needed to face the risk that the current credit seizure in developed economies spreads to emerging countries with limited access to liquidity, Mantega said. "The problem has not spread to these countries yet, but that possibility cannot be ruled out,'' Mantega said.[52]

April 12 (Bloomberg) -- The International Monetary Fund should boost available credit for emerging economies during crises to help the countries recover more quickly, Finance Minister Guido Mantega said.[52] The International Monetary Fund has warned overseas exporters that despite resilient growth, India, China and other emerging economies will not be insulated from the serious world economic slowdown.[24]

Nearly half of the West African country's 12 million people will receive vaccines during the week-long campaign beginning on Saturday, the WHO said. A senior Argentine official, Cabinet Chief Alberto Fernandez, proposed Friday that the Inter-American Development Bank replace the International Monetary Fund in an economic monitoring role that Paris Club creditor countries are demanding before they approve a long-awaited restructuring of Argentina's defaulted debt.[30] The session marked the end of spring meetings for the bank and the International Monetary Fund. Investors Await Bank Earnings This Week NEW YORK (AP) _ Investors knew the first three months of the year were bad for companies, but now it looks like they were downright abysmal _ and that there might be more pain to come. With the nation's banks releasing their quarterly results this week, anxiety has returned to the stock market. Last week ended on a grim note, with the Dow Jones industrials falling 256 points Friday after General Electric Co. reported a profit decline and lowered its forecast for the year.[47]

'''China has passed Germany and Japan to become the world's second-largest economy, World Development Indicators 2008 (WDI) report examining the purchasing power of global economies.''' The findings come from a new study published by the Bank on the eve of its spring meeting in Washington, the first time since 1993 that the relative purchasing power of citizens in many countries has been examined.[30] At the October meetings of the G7, the IMF and World Bank, the market turmoil that had erupted in August from rising defaults in the U.S. high-risk subprime home loan sector was largely viewed as a contained event that did not threaten the broader world economy.[31] A vociferous critic of the U.S. government, Chavez also has long opposed the policies of the IMF and the World Bank. He called the IMF "the financial arm of the empire." The leftist leader spoke during a parade marking the anniversary of a failed 2002 coup that briefly drove him from power. He accuses U.S. President George W. Bushs government of being behind the coup, which U.S. officials deny. Speaking to troops, Chavez said of the U.S.: "Its an empire in decline, but its still very dangerous."[51]

Domenico Lombardi, president of the Oxford Institute for Economic Policy, told the Washington Post policy responses will likely differ between Asian and European economies and the U.S. due to the different levels of financial chaos in the three regions. Last year's gathering had a different tone as the focus shifted from economic problems to mounting pressures for World Bank president Paul Wolfowitz to step down over the assistance he extended to partner Shaha Riza to gain a promotion at the World Bank.[28] World Finance Leaders Tackle Bank Reform WASHINGTON (AP) _ World financial leaders facing the gravest economic crisis in at least a decade are pledging tighter control of banks and other financial institutions and hoping the U.S. slump is short.[47] Some of the IMFs biggest reforms — shifting voting power more toward emerging economic powers and overhauling the IMF’s 62-year-old financial mechanism with spending cuts — have consumed the institution in the midst of the largest financial crisis since the Great Depression.[11]

Regarding internal reforms, the IMF said it hoped governors would soon approve key voting and financial measures approved by the executive board. It said it looked forward to approval of a reform of voting rights, long demanded by developing countries, by April 28, and a new income model that includes the sale of 403 tonnes of gold to raise cash, by May 5.[12] The IMF board recently approved a series of reforms, ranging from creation of a new voting rights system that gives more voice to developing countries to a sharp budget cutback and the sale of 403 metric tonnes of gold reserves to replenish coffers.[7]

"In a systemic crisis, developing countries may have to rely on IMF loans to cope.''[52]

The Japanese government has decided to take up the issue of global food price rises at the Group of Eight summit to be held in Hokkaido in July, officials said Friday. Japan hopes to share a sense of crisis over the food price rises, which are seen hitting hardest poor people in developing countries, with its G8 partners at the Hokkaido Toyako summit, the officials said.[30] In another meeting, the World Bank is confronting the problem of rising food prices that could spark deadly unrest in developing countries, underscoring the urgency of getting food aid to desperate people.[53]

Soaring food prices pushed inflation concerns to the forefront as the World Bank warned of an impending humanitarian crisis that could undo years of poverty-reduction efforts.[8] The World Bank will discuss food prices that it has said have risen 83 percent since February of 2004.[33]

Strauss-Kahn was more direct. 'I think we are right,' he said, although he quickly downplayed differences in the growth forecast and said all IMF members agree on the size and type of risk that economies face going forward. 'What's important is whether or not we agree on the risks. we have in front of us. and I think from this point of view there is no difference,' he said. 'If food prices go on as they are today, then the consequences on the population. will be terrific,' he said.[14] Washington, April 13 (IANS) Faced with a slowing world economy and market turmoil, world financial leaders propose to closely follow how India tackles the problem of rising prices by balancing growth with the potential risks to price stability.[42] Oil has touched a record $112 a barrel, and the price of rice has nearly doubled in just three months. IMF economists expect the world economy to slow to under four percent growth in 2008, its slowest performance in five years.[19] In the event, the world economy managed 5% annual growth over the 2004-7 period, the best for three-and-a-half decades. Keep that 4% in mind - it's close to what the IMF predicts for the next couple of years (3.7% and 3.8% respectively).[43]

In March, the IMF said it saw growth of just under 1.5 percent in 2008 and 2009. Swiss National Bank Chairman Jean-Pierre Roth was quoted by Swiss news agency SDA as saying he was more upbeat about the outlook for the Swiss economy.[50]

Simon Johnson, economic counselor and director of research for the IMF, stresses that global growth should return to healthy levels in 2010. Nervous finance ministers, facing a chorus of bad news and political pressure at home, may find it difficult to wait and hope that he is right.[17] With global finance chiefs likely to sign off on the final two and the most contentious of a string of reforms which got underway in 2006, Strauss-Kahn said the IMF would now try to reassert itself into the forefront of global economic oversight.[11] The United States is the largest IMF shareholder with more than 15 percent of the votes. After the reforms, Strauss-Kahn said, the IMF needs to refocus on its mission. "We now need to stop looking inwards to the problem of organizing the fund itself and spend more time looking outwards to the problems of the world," he said. Associated Press writer Desmond Butler contributed to this report.[6] Padoa-Schioppa agreed that the idea was still alive but added, "the reluctance is also there." "It goes strongly against common sense to think that an area that has been capable of making a huge change of moving from many currencies to one, the simple corollary of having a single seat is so difficult to achieve," he said. "I think that sooner or later this contradiction will be corrected. By consolidating its power in one seat, Europe could conceivably overtake the United States as the largest player in the IMF. Strauss-Kahn pointed out that such a change might mean a change of address for the Washington-based IMF. The fund's articles of agreement creating the fund stipulate that its headquarters must be in the country of the biggest shareholder, he noted.[49]

The recessions in the mid-1970s and early 1980s were worse than most people expect to experience now, even if things deteriorate further. It is a case of all hands to the financial pumps - the pressure on the banks and others has been turned up. G7 and IMF meetings have called on them to come clean quickly and fully on the extent of the losses they have made or could make on financial assets that are backed by dubious loans. The banks are also being pressed to raise extra capital to plug any holes in their finances that those losses might open up. Why press them? Because shareholders tend not to like it ' they either have to come up with extra cash or find their existing stakes diluted. [32] We have seen how strains in markets can quickly become reinforcing, and the possibility of a negative spiral or 'financial decelerator' remains a possibility." President George Bush has already signed off a $150bn tax rebate package to kick-start the economy, and the Federal Reserve has backed an emergency buyout of investment bank Bear Stearns, but the IMF said this may still not be enough: "Room may need to be found for some additional support for housing and financial markets." In the UK, the chancellor has repeatedly insisted that the economy is "better-placed" to weather the storm, because of its flexible labor market and low unemployment, but the IMF calculated that the British housing market is overvalued by up to 30%, and could be destined for a damaging correction.[16]

IMF's reports will be monitored by international investors and finance institutions. Such reports will have a great importance concerning the credibility of the economic program Turkey is implementing. This method is generally used by countries which have completed their stand-by arrangements with IMF, added experts. Another alternative, which is a "Cautionary Stand-by" with the IMF, will also include scheduled reviews. In such model, it will be up to Turkey whether to use the loan it will be granted following the reviews.[39]

Talks Focus on World Economy, Food Costs WASHINGTON (AP) _ International finance leaders are working on plans to deal with the economic crisis that has roiled nations and sent food and energy prices soaring.[47] There is no evidence that the world economy, while damaged by the crisis, is about to go pop. The Bank's monetary policy committee, when it sat down to consider its rate verdict on Thursday, was caught between a rock and a hard place. Had it not cut, any mild satisfaction it could have obtained by not bowing to some obvious political pressure from Gordon Brown would have been lost in the criticism it would have had from all quarters for sitting on its hands.[43] In the meantime, the priority is to get troubled asset-backed securities markets operating once again, after nine months of near-shutdown. One radical solution under discussion is for central banks to buy up these securities directly - one step beyond lending against them. "It's possible," says Lipsky, though both the Federal Reserve and Bank of England deny it's a plan. Then, in an era where both policy-makers and banks should "think the unthinkable", few options are judged completely radical any longer. According to the Fund, there are three lines of defence available in this credit crisis: monetary policy and interest rates; fiscal policy, namely tax cuts, and, the trump card, direct use of public money. The latter could encompass what the U.S. authorities did in the wake of the Bear Stearns' collapse, supporting the JP Morgan takeover with a special loan in exchange for Bear's securities.[26] The Chilean peso has appreciated sharply in recent months due to higher copper prices and the weakness of the U.S. dollar. This weakness has been exacerbated by the interest rate differential with the U.S.; while the Federal Reserve has been cutting rates to offset an economic slowdown, the Chilean central bank has been raising rates to stem inflation.[40] "There is growing apprehension that financial stability concerns are distracting central banks in advanced economies from emerging inflation risks," Chidambaram said.[42] The Committee welcomes the actions taken by the central banks of the advanced economies to provide liquidity support to ease strains in interbank markets, and calls for continued vigilance to deal with the financial turmoil.[22]

Shirakawa added that BOJ has given advice to other central banks and would continue to play a role for stability in financial markets.[27] There is also a debate about more unusual ideas. Perhaps governments or central banks should go into the financial markets and buy some of these dodgy assets. It is not being ruled out, although they do not seem ready for it yet - if it comes to that it will stick in the throats of many people.[32]

IMF policymakers also welcomed moves by central banks to provide liquidity support to ease strains in the credit markets.[12] Gloom from Halifax, West Yorkshire, on the housing market, of which more below. Even the Bank of England's quarter-point cut in interest rates was gloomy, given it was forced into this by what it described as "worsening" credit conditions. Seldom has a rate cut been greeted with more of a shrug, or such a widespread perception that it will make no difference. Can I say anything to lift the gloom? Let me start with the IMF. Its latest world economic outlook, published to coincide with the spring meetings it co-hosts with the World Bank, did indeed have some scary language.[43] "We see the outlook more optimistically than the IMF," Roth was quoted as saying at a media conference in Washington at the spring meetings of the IMF and World Bank.[50]

Fiscal action, more regulation and an IMF which is prepared to be more interventionist than in previous decades. It seems the ghost of IMF and World Bank architect John Maynard Keynes is hanging more heavily than ever over the Washington institutions. This is hardly a surprise, according to Lipsky. "If you go to our executive board you would find to the right of our director's chair a bust of Keynes," he says. "He's always been present since the beginning of the Fund."[26]

The IMF and World Bank urged efforts to address the food crisis that is stoking violence and political instability, and the longer term needs of development and poverty reduction, the bank's main function.[31] Food and finance. Those have been the two big themes over the last week at the IMF and the World Bank.[32]

"Strong growth over the period has increased the shares of all developing regions except Latin America and the Caribbean, while the share of high-income economies fell by 5 percent," the World Bank said. This year's WDI introduces new estimates of purchasing power parity (PPP). PPPs are used to convert local currencies to a common currency - in this case the U.S. dollar.'''[30] Developing economies now produce 41 percent of the world's output, up from 36 percent in 2000, the World Bank said Friday. "The combined output of the world's economies reached 59 trillion dollars in 2006," said the international institution in its World Development Indicators (WDI) 2008.[30]

The World Bank's policy-setting committee was focusing Sunday on the fallout on developing countries, especially poor ones where the agency is trying to help reduce poverty.[47] Purchasing power parity is used to determine the relative value of currencies, based on what money can buy, which varies from country to country according to the availability and demand for goods, among other factors. '' '''When we measure economies on a comparable global scale, the growing clout of developing countries comes into sharp relief,''' Alan Gelb, acting Bank chief economist said.[30] Briefly noted ''' Food riots in developing countries will spread unless world leaders take major steps to reduce prices for the poor, the head of the United Nations Food and Agriculture Organisation (FAO) said on Friday. Despite a forecast 2.6 percent hike in global cereal output this year, record prices are unlikely to fall, forcing poorer countries' food import bills up 56 percent and hungry people on to the streets, FAO Director General Jacques Diouf said.[30]

Dow Jones reports that G24 director Amar Bhattacharya told reporters at a subsequent G24 press conference: ''' '''. '''It is also clear the present events are having an effect on developing countries, including a downturn in external demand, potential instability in capital flows, and through stock markets, but most importantly right now through high energy and food prices.''' '' '''Developing countries cannot be complacent. AFP notes that '''''' The G24 statement said that so far their economies '''have been broadly resilient. supported by solid fundamentals, sound policies and financial buffers built up over recent years.'''[30] The Group of 24 (G24) developing countries also wants the United States and other major industrialized nations to take decisive action to deal with the present economic and financial crises, specifically by more closely monitoring and supervising the markets.[30] Europe currently controls eight of the IMF board's 24 seats. The United States has called for the IMF to reduce the size of its board to 22 by 2010, and to 20 by 2012, but does not want to remove seats held by developing countries. That leaves Europe as the logical choice to cut back.[49]

AFP adds that ''' The IMF on Friday said it expects growth in Asia and the Pacific to decline by 1.25 percentage points to 6.2 percent in 2008 because of the weakening economic climate outside the region. The IMF said in its Regional Economic Outlook that 2008 is shaping up as a challenging year for the region, but that activity remains fairly buoyant, even as growth in the United States -- and to a lesser extent Europe -- is slowing sharply.[30] The IMF's view is that the wider economic effects of the crisis will mean a mild recession in the U.S. and rather slower growth in the rest of the world.[32] Growth estimates for 2009 are also down, and the IMF forecast a 25% chance that growth may fall below 3%--their criteria for global recession.[17] Speaking of object lessons in how not to interpret statistics, how about looking at the IMF growth forecasts on a per capita basis? As the Office of National Statistics is predicting that the population of the UK will grow by.7% a year over the next ten years, then almost half of the IMF's projected growth rate of 1.6% is rendered meaningless on a per capita basis, which is the only statistic that really matters in measuring how well off people are. It's disingenuous to compare non-per capita growth rates of countries like Britain or America which have higher rates of population growth to countries like Japan or Italy which see negative or no growth in population. "But let's wait a while before declaring that the crash has started" - in other words, I'll wait until I've heard it from a couple of other sources (I secretly steal my ideas from) then when I'm sure they are sure I'll announce my genius theory.[43]

"Hundreds of thousands of people will be starving. (leading) to disruption of the economic environment," Strauss-Kahn told a news conference at the close of the IMF spring meeting here. Development gains made in the past five or 10 years could be "totally destroyed," he said, warning that social unrest could even lead to war. "As we know, learning from the past, those kind of questions sometimes end in war," he said. If the world wanted to avoid "these terrible consequences," then rising prices had to be tackled.[12] The IMF President, DOMINIQUE STRAUSS KAHN, has warned that hundreds of thousands of people will face starvation if food prices kept rising. Speaking at the meeting of the IMF in Washington, he said that the social unrest from continuing rise in food prices could cause conflicts and violence.[23] The head of the International Monetary Fund has said rising food prices may lead to a humanitarian crisis.[54] Meeting in the U.S. capital, the International Monetary Fund called for strong action and close co-operation to tackle the crisis.[53] According to the International Monetary Fund biannual report, the U.S. credit squeeze could cost more than USD 945 billion worldwide.[25]

According to the IMF itself, the costs of the U.S. property slide alone will mount to just under $1,000bn. Half of this will be absorbed by banks, the other by investors such as pension and hedge funds.[26] Banks have already written off some $225 billion in bad debts tied to failing U.S. subprime mortgages and other loans. The IMF estimated that total losses may near $1 trillion once insurers and others add in their final tally of the damage.[8]

Continued close IMF collaboration with the FSF, the Bank for International Settlements, standard-setting bodies and national authorities will be essential "to ensure that the lessons from the crisis are effectively shared and that agreed policy actions are rapidly implemented''.[21] The IMF also applauded Financial Stability Forum policy recommendations adopted Friday by the Group of Seven industrialized countries in the hope of improving transparency and resiliency in the financial markets within 100 days.[12] In advanced economies, the IMF said monetary policy should continue to aim at price stability over the next few months.[44] In the advanced economies, the committee said, monetary policy should continue to aim at medium-term price stability, while responding flexibly to signs of a more pronounced and prolonged economic downturn.[9]

What is not clear now are that to what extent the financial turbulence in advanced economies will affect the financial system in emerging and developing economies, and that how the economic slowdown in developed countries will affect exports of emerging and developing economies. [1] Apart from the financial turbulence, the slowdown in growth of advanced economies will also add uncertainties to the outlook of emerging and developing economies.[1]

In the United States, temporary fiscal easing will help to counter downside risks to growth. Other advanced economies have also experienced financial turbulence and their growth rates have declined; when consistent with medium term fiscal objectives, automatic stabilizers should be allowed full play.[22] While the G7 -- the United States, Canada, Britain, France, Germany, Italy and Japan -- stopped short of saying the U.S. economy was heading for recession after a meeting on Friday, European Monetary Affairs Commissioner Joaquin Almunia acknowledged the risk of a U.S. downturn had increased.[20] There was widespread acknowledgment, however, that risks to global growth had risen with a sharp slowdown in the U.S. economy.[5] The fund is projecting the global economy to grow by 3.7 percent in 2008 and 3.8 percent in 2009. It also says there is a risk that the credit crunch could cause deeper losses, further slowing the world economy.[35]

Turmoil in financial markets, tight credit, weaker housing markets and inflation are the biggest risks facing the economy, the committee said.[10]

IMF analysts argue that risks of a credit "crunch" have increased and that "broadening deterioration of credit is likely to put added pressure on systemically important financial institutions."[37] "Financial sector risks related to household borrowing appeared relatively manageable''' Stress tests indicated that borrowers at risk of significant mortgage payment increases remained a small minority, concentrated mostly among higher-income households that were aware of the attendant risks". This was the IMF's judgment at the height of the sub-prime mortgage boom. Nor has the IMF's conduct found much favour with Paul Niven, head of asset management at F&C; Investments. He recalls that, back in the 1990s, the IMF "encouraged" predominantly Asian authorities to hike local interest rates and cut government spending in order to boost confidence from investors and regain access to overseas lending.[4]

Simon Johnson, the IMF's director of research, said later the key risk to the forecasts was the danger of a vicious circle emerging, as house prices continue to fall, dealing a fresh blow to the banks, and exacerbating the problems in the markets.[16] After consultations with Fed officials, the IMF noted, "staff and officials agreed that a range of indicators suggested that systemic risks were at a low ebb". This was after the officials had drawn attention to how "banks had been remarkably adept in responding to changing market conditions. even small and regional banks had traded parts of their loan book against mortgage-backed securities, reducing their vulnerability to regional shocks".[4]

The U.S. strategy echoes an international plan drafted by the Financial Stability Forum (FSF) that would require more transparency from the banks and reinforcement of capital reserves as part of improved risk management to avert future crises.[2] The G7 endorsed a report from the Financial Stability Forum that spelled out dozens of reforms needed from global banks and regulators.[8] "There are pockets of vulnerabilities," Caruana said while releasing the Global Financial Stability Report. According to Caruana, global spillovers could test this resilience through three main channels.[1] The FSF, comprising top global financial authorities, released a report Friday that calls for measures that would strengthen liquidity, risk management, transparency and the oversight of capital, among other things.[13] The unfolding global financial crisis adds uncertainty and the balance of risks remains on the downside.[30]

THE world's economic leaders are speaking with one voice: boldness and strength will be needed to solve the global financial crisis.[53] Shirakawa said the world could utilize BOJ's experience in weathering Japan's 1990s banking crisis, in trying to solve the current global financial turmoil. He said BOJ took various innovative measures during the bad-loan crisis, apparently referring to such measures as prolonging the period of money market operations and accepting a wider range of collateral.[27] The threat that the crisis poses is derailing the evolution of the global financial system.[26]

Global GDP growth is projected to decelerate to 3.7% in 2008, in the wake of financial crisis.[27] Just 12 months ago, world finance officials were basking in strong global growth, unaware that a U.S. housing boom was about to go bust, triggering what could be the biggest financial shock since the Great Depression.[48]

Johnson attributed the anemic growth rate to weakening external demand due to the U.S. downturn, a stronger euro, continued financial market strains and rising energy costs. He added that housing downturns have been a problem in some European countries.[18] Even exchange rates, a perennial topic at the summits, are increasing determined by cash flows to Asia, rather than just across the Atlantic. Even if they could reach an agreement on what needs tweaking, the G7 finance ministers have never had less ability to adjust the values of the weak dollar and strong euro. U.S. Treasury Secretary Henry Paulson is set to address the finance ministers at 2 p.m. One thing that could emerge from this weekend's summit: an echo of Paulson's call for reforming the way financial markets are regulated.[17]

The Group of Seven leading industrial nations held back from unveiling bold new actions aimed at combating the crisis at their meeting Friday, though they committed to a range of regulatory changes that could reshape the workings of the financial system in years to come. In the meantime, however, the G7 finance officials gave a clear signal that the slide in the dollar and the surge in the euro weren't something they could ignore.[13] The Group of Seven finance ministers meeting in Washington, while not unveiling dramatic full plans, publicly committed to a range of regulatory changes that could reshape the workings of the financial system in years to come.[53]

Alistair Darling is due to fly to Washington tomorrow to discuss the turmoil with fellow G7 finance ministers. Mervyn King, governor of the Bank of England, will also be in Washington this weekend to discuss the ramifications of the credit crunch with central bankers from around the world[16] The finance ministers and central bankers of 24 advanced and developing countries are discussing reforms collectively advanced by the G7 group of industrialized nations - in other words Europe, North America, and Japan.[19] Strauss-Kahn said the changes represent the first deep reforms of a UN institution. Even as the reform process nears completion, some of its impact will be phased in over time, such as increased voting power for emerging and developing countries. “We have to judge this reform not only by its immediate results but (how they are) delivered over the coming five, 10 or 15 years,” he said.[11]

Some emerging economies argue that the 2,7% shift in voting power from developed nations to developing ones, which have a larger stake of the world economy, was too little to boost the legitimacy of the IMF. Emerging economies such as India said they would accept the vote reform with reservations because it was the best they could get now while they keep pushing for more.[11] According to the IMF, emerging and developing economies include economies in Africa, central and eastern Europe, Commonwealth of Independent States, developing Asia, Middle East and Western Hemisphere.[1] For many emerging and developing economies, "containing inflation and addressing vulnerabilities remain key priorities," the IMF noted.[1] Johnson said many emerging and developing economies are threatened by inflation and the risk of becoming overheated. He said governments of emerging economies could ease pressure on food and energy prices by adopting more open trade policies in those areas.[18] "For many countries, containing inflation and addressing vulnerabilities remain key priorities," the committee added. It noted that a number of developing countries, especially low-income countries, face a sharp rise in food and energy prices, which have a particularly strong impact on the poorest segments of the population.[9] Rising food prices are an increasing concern not only in developing countries but also in developed economies. This rise has been exacerbated by the increasing diversion of food grains and other crops towards bio-fuels, he noted.[42]

Speaking at a press conference today, Mr. Strauss-Kahn, a former French finance minister, called the potential effect of higher food prices on many poorer countries "horrific."[10]

The matter has been a source of political controversy in Europe for years. Dominique Strauss-Kahn, head of the IMF, said that when he was French finance minister a decade ago, he had agreed with his German counterpart to share a seat.[49]

Strauss-Kahn said the plan, if implemented, "will put the institution on solid financial footing and modernize the IMF's structure and operations."[18] "There is no other institution but the IMF that is likely to work on the linkages between the financial sector and the real economy, and that is really what today is at stake."[27] IMF "should orchestrate a worldwide response" to the crisis in financial markets," said Colin Bradford, a senior fellow at the Brookings Institution told the Post. "The pressure is on politicians this weekend to come up with an answer," he said.[33] In a statement, the IMF said that "policymakers should continue to respond to the challenge of dealing with the financial crisis and supporting activity, while making sure that inflation is kept under control."[12]

'I think we should be very careful. There are cons and pros, and they must be studied very thoroughly,' he said. IMF member countries are actively debating the possibility to put banking supervisory agencies in charge of market control, as such agencies are directly linked to the formation of the monetary and credit policies of national banks, Kudrin said. 'There is no common opinion so far, and additional debates are necessary,' he said. Anyway, market regulatory measures must not be very strict, as there are always instruments of their evasion, he said. [29] The fund should speed up the implementation of a so-called Rapid Access Line credit facility, Mantega said. He also urged the IMF to extend the use of liquidity-provision instruments to developing economies.[52] The discussion comes as the IMF tries to give developing economies a bigger voice. Europe has long debated consolidating its IMF votes, but has yet to decide how.[49]

The IMFC said developing economies had shown resilience in the face of the crisis sparked by mounting U.S. mortgage defaults, but cautioned that inflationary risks had picked up.[5] Argentine Economy Minister Martin Lousteau cautioned that developing and emerging economies were not completely shielded from the crisis despite an unprecedented build-up in reserves. "The crisis is very distinct and we may need to navigate in unchartered waters," he said.[20]

Developing countries have not been hit hard by the financial crisis, although it could get worse.[32] The committee said it looked forward to approval of a reform of voting rights, long demanded by developing countries, by April 28, and a new income model that includes the sale of 403 tonnes of gold to raise cash, by May 5.[21]

At the same time, $105-billion of new capital has been injected into troubled financial institutions. Sovereign wealth funds - pools of investment capital owned by a state - have been responsible for about $41-billion of that new capital, and they have been major players in most of the refinancings. [36] "We reaffirm our shared interest in a strong and stable international financial system. Since our last meeting, there have been at times sharp fluctuations in major currencies and we are concerned about their possible implications for economic and financial stability," the statement said.[13] "The credit shock emanating from the U.S. subprime crisis is set to broaden amid a significant economic slowdown," Caruana said, briefing reporters April 8 about the coming IMF-World Bank meeting.[18] WASHINGTON (Reuters) - World finance leaders concluded a whirlwind weekend with a new plan to clean up banks and fresh resolve to rein in foreign exchange markets, but little hope that the credit crisis was nearing an end.[8]

Tuesday, former Fed Chairman Paul Volcker discussed the unusual intervention by the central bank in the workings of Wall Street last month, including the rescue of investment bank Bear Stearns. The Fed took actions 'that extended to the very edge of its lawful and implied power, transcending certain long embedded central banking principles and practices,' Volcker said in a speech to the Economic Club of New York. Alan Greenspan, in an interview on CNBC, said the nation is 'in the throes of a recession,' as he defended the decisions he made when he was Fed chairman.[3] Tuesday, the Federal Reserve released minutes of the March meeting at which it cut the interest rate it controls by three-quarters of a percentage point ' showing that members of the central bank's policymaking committee feared a recession.[3] The panel indicated the Bank of Japan and other central banks in advanced economies should cut interest rates if necessary, while keeping inflation at bay.[34]

The central bank has raised the monetary policy interest rate by 125 basis points since mid-2007, bringing it to 6.25% in January.[40]

The U.S. Federal Reserve, the European Central Bank and other central banks of advanced economies have pumped hundreds of billions of dollars into the money markets that seized up in August after rising defaults in the U.S. high-risk subprime home loan sector.[21] Some European officials, who have sounded increasingly alarmed about the record-high rise in the euro to above $1.59 last month, also conveyed a matter-of-fact tone about the shift. European Central Bank President Jean-Claude Trichet declined to expand on the wording in the G7 communique, saying Friday, "It's like a poem: it speaks by itself."[13]

You're suggesting that the IMF?World Bank are some sort of experts on "financial stability? The same World Bank that the Wall Street Journal recently "reported on a $569 million corruption scandal involving five World Bank health projects in India."[15] Chavez spoke as the IMF and World Bank were holding weekend discussions in Washington.[51] '''There are a lot of implications. One of them is it helps us to see that the domestic market in China is really much larger than people might have thought when they were looking at the exchange rate data,''' said Eric Swanson, Program Manager for the World Bank's development data group. '''China will continue to have a vast domestic market that produces for it but it also suggests to other participants in the world economy that China is not just a producer of goods but also a vast potential market,''' he said.'''[30] Japan intends to work together with the World Bank to improve Africa's economy and farming sector, Nukaga said in a meeting with World Bank President Robert Zoellick. UN boss Ban Ki-moon is to make a four-nation West African tour later this month to promote the world body's peace building and poverty reduction efforts, his press office said Friday.[30]

The downbeat G7 communique noted that the world economy remains in a "difficult period" and that the financial market turmoil that was sparked in the U.S. subprime market is "more protracted than we had anticipated." [13] The challenges currently facing the world economy are unusual since at the same time that economic growth is slowing inflationary pressures are rising.[19] Negative economic growth over six months would indicate a recession. Chairman Ben Bernanke basically endorsed that view last week in congressional testimony, as he acknowledged the possibility of recession and said that the economy may not grow much 'if at all' in the first half of the year.[3]

The IMF expects the Swiss economy to grow 1.3 per cent in 2008 and is forecasting growth of 0.9 per cent in 2009.[50] The IMF has predicted a mild recession for the United States through 2008 with growth slow in other developed counties, as well.[33] ' This article was amended on Friday April 11 2008. We said that the IMF expects the U.S. to achieve GDP growth of 0.6% in 2008, when this is actually their prediction for 2009 growth. This has been corrected.[16] "The risk that the U.S. will fall into a recession in 2008 has increased and real GDP growth in the euro area is also slowing down," European Monetary Affairs Commissioner Joaquin Almunia said.[5]

The suggestion that the taxpayer should bear some of the cost of the market meltdown is unlikely to find much favour among taxpayers either in the U.S. or the UK. Voters recoil from tax revenues being diverted to support a financial sector characterised by breathtaking levels of reward for the growth and leveraging of sub-prime debt. The pay-off for Northern Rock's departing chief executive strongly undermines taxpayer support for further interventions of this kind.[4]

U.S. Federal Reserve chairman Ben Bernanke said Thursday the current financial crisis requires swift action to improve U.S. market regulation and backed a U.S. task force plan.[2] "Sentiment in financial markets has improved in recent weeks since the Federal Reserve's strong actions with regard to investment banks.[16]

"I am confident that we will reach a consensus on concrete actions and a clear road map and timetable for reforms," French Finance Minister Christine Lagarde wrote in an opinion article published Friday in the Financial Times.[2] "We should not raise our expectations," says Domenico Lombardi, the president of the Oxford Institute for Economic Policy and a senior scholar at the Brookings Institute. "The G7 finance ministers are going to share a lot of information about the state of their own economies."[17] Analysts said the G7 statement was a welcome recognition of the seriousness of the problems, especially with regard to the banks and getting some transparency back into the system. Mark Weisbrot, an economist and co-director of the Center for Economic and Policy Research in Washington, said "it is very positive that the G7 recognized this."[7]

A succession of observers have said the financial crisis is the worst since the great depression of the 1930s, and policy makers gathered in Washington are taking the comparison seriously.[32] WASHINGTON, April 11 (UPI) -- World financial leaders meeting in Washington through Sunday will have their plates full, policy analysts say.[33]

"Global financial instability has increased'' since the committee's last meeting in October, the statement said.[10] Quickly implementing the dozens of recommendations by the Financial Stability Forum would "not only enhance the resilience of the global financial system for the longer term, but should help to support confidence and improve the functioning of the markets," the communique said.[13]

At the heart of the IMF, a supranational authority charged with providing financial supervision and stability, there is clearly some sorting out to do.[4] The IMF also conducted Article IV reviews of U.S. policy in the run-up to the credit market troubles. The most pertinent of these was published in July 2006. At that time, there had already been a massive build-up in credit transfer instruments and the U.S. housing market had peaked out. This was the very latest moment when the IMF could usefully have sounded the alarm.[4] Around two-thirds of IMF member countries chose to take part in the scheme but the U.S. did not agree until 2006 and its evaluation is not due to begin until 2009. Yeah, but he's French, and what do they know? I mean, they're so dumb they warned that invading Iraq would be a disaster.[15] There's a fear that countries with ulterior motives could be amassing important assets around the world, taking advantage of the West's weakness. Those fears could be put to rest if the funds would be more transparent and rigorous about their investment practices and motivations, say negotiators at the IMF and the Organization for Economic Co-operation and Development.[36] The text added that the UK was "appropriately, aiming to balance the costs and benefits of regulation" ''' sentiments that would have been warmly welcomed by the then chancellor, Gordon Brown, even though the balance proved hardly up to the job. Perhaps, says Lewis, this explains why Brown and Alistair Darling now strongly support giving the IMF the lead role in dealing with global market woes: "They subscribe with IMF officials to a common fund of presuppositions and bathe in the same pool of complacency."[4]

The FSF dropped an idea proposed by the U.K. - and given tentative backing by the G7 in February - to set up an early warning system with the IMF, however. New York Federal Reserve Bank President Timothy Geithner said Saturday the FSF "made the judgment. that those were not realistic objectives for a forum like this."[13] As low-income countries struggle to cope, new IMF head Dominique Strauss-Kahn has warned that hundreds of thousands of people could starve if the problems are not tackled.[48] The reforms, which require approval of 85 percent of the IMF's voting power to be adopted, "will be a real big success for the institution," Strauss-Kahn said.[7] IMF Managing Director Dominique Strauss-Kahn said forecasting growth was especially tough in the current environment. "I don't think really that the difference between 0.1 or 0.2 has such an importance," he said.[5]

Jaime Caruana, director of the IMF's Monetary and Capital Markets Department, said there has been a "collective failure" to appreciate the economic damage caused by the subprime crisis. [18] 'We have all to be a little bit humble on the analysis of the crisis, because it has been a very, very complex crisis,' Jaime Caruana, the IMF's director of monetary and capital markets, said at a briefing.[3]

Talk of the Great Depression is, if not alarmist, certainly alarming. Let us be clear, however, that the IMF is not predicting such an outcome for the world economy. [43] The 185-nation IMF called for a strong front to put the reeling world economy back on track.[12]

The committee noted that fiscal policy can play "a useful counter-cyclical role," indicating the ministers and central bankers on the committee who normally counsel balanced budgets and debt reduction believe governments should consider tax rebates or other stimulus measures to stop the world economy's slide.[10] "The challenges facing the world economy are of a global nature, requiring strong action and close cooperation among the membership."[46] The global economy, it suggested, would grow by about 4% a year over the following three to four years. It was not a bad forecast but it was too cautious.[43] What was strong a few years ago looks weak in the context of the global economy's recent performance.[43]

"For the first time in modern times we can say there is a global economy," says Lipsky. "You wouldn't have said that prior to 1990 and certainly it's emerged decisively in the past decade. That creates governance issues which had not existed before." All of this has brought great benefits, he adds, but it's clear the entire system needs to be re-examined.[26] While there was plenty of agreement on what ails the global economy, finding a cure was trickier.[8] Amid calls for closer tabs to be kept on the global economy, there was also another focus.[48]

The G7 hosted executives from leading global banks at a dinner Friday night to discuss the latest developments in the crisis. [13] The G7 also endorsed a plan to fix the weaknesses in the financial system that enabled the crisis to spread broadly across asset types and borders.[13] The G7 pledged to implement some recommendations by the FSF within 100 days. Financial institutions should fully disclose their risk exposures by the mid-year reporting period in line with the FSF guidelines, strengthen risk-management practices and raise capital as needed, it said, while the Basel Committee would be asked to issue revised liquidity risk-management guidelines by July.[13] Caruana said the immediate challenge for policymakers as well as financial institutions is to contain and mitigate systemic risks and economic spillovers.[18]

"Indeed, many of the necessary changes that have been identified, including increasing transparency, improving risk management and attaining better coordination among regulators, could provide important support to the process of normalizing our financial markets." Paulson made his position clear on Thursday that he wants banks to be ready to play their role as a market stabilizer.[27] Risks to the outlook come from the still unfolding events in financial markets and from the potential worsening of housing and credit cycles.[22]

As the man who urged governments around the world to "think the unthinkable" about the financial crisis, you could reasonably cast the magnificently moustached John Lipsky as the General Kitchener of the credit crunch.[26] The international financial crisis has cast a deep shadow over the proceedings, but there is no sense of panic.[32] On the international financial stage, the world's top experts are holding talks in Washington Friday.[41] Now, as the International Monetary Fund's steering committee gathered in Washington, things are very different.[48] Dominique Strauss-Kahn, managing director of the International Monetary Fund, said Saturday the fund shares the concerns about currency markets expressed by the G7.[13] "But it is a new kind of crisis," the International Monetary Fund chief said at a news conference.[7] "The International Monetary Fund is selling what gold it has left to be able to pay salaries," Chavez said.[51]

Reuters is the world's largest international multimedia news agency, providing investing news, world news, business news, technology news, headline news, small business news, news alerts, personal finance, stock market, and mutual funds information available on Reuters.com, video, mobile, and interactive television platforms. [46]

India 's annual rate of inflation has jumped to a 3 1/2-year high of 7.41 percent, a rate opposition politicians said would bring about the collapse of the Congress-led UPA coalition government if it endured. The new figures for wholesale price inflation announced yesterday mean prices are rising at their fastest rate since November 2004 and far above the Reserve Bank of India 's comfort ceiling of 5 percent.[30] The other matter of concern, deep concern, for less developed countries, but also for the developed countries, is the food and other commodity price increases. This is a new challenge in these difficult economic times."[48] Commodity-exporting countries, exposed to the risk of significant swings in commodity prices, should maintain progress toward economic diversification.[22]

Rates were left unchanged in February and March "due to the likely disinflationary impact of the significant strengthening of the currency," the representative said. The currency strength, as well as fiscal measures passed earlier this year, should "mitigate the risk of excessive propagation of supply shocks to underlying price pressures," Lousteau said.[40]

Divergence rather than decoupling is the new buzz word and it is also the new reality. While advanced economies will grow by 1.3% this year and next, emerging and developing economies will expand by 6.7% and 6.6% respectively.[43] Using new measurements that take into account the differences in price levels between economies, five of the 12 largest economies are developing economies, according to the report.[30] Concerns over rising prices for food have already shaken developing economies worldwide.[48] Concerns over rising prices for food and other commodities, and related shortages of key staples, has shaken developing economies worldwide, sparking often-violent protests.[5]

Overall, developing economies were on average 2.2 times larger when measured by purchasing power than by exchange rates, the Bank said. GDPs of low-income economies were revised up an average 160 per cent when viewed by purchasing power, and those of middle-income economies by 120 per cent.[30] Friday represented the first big change in the core currency statement since the February 2004 Boca Raton G7 statement, which warned that "excess volatility and disorderly movements in exchange rates are undesirable for economic growth." It was also the first time the G7 expressed explicit concern about currency movements since they intervened to support the sagging euro at their September 2000 meeting in Prague.[13] Even the big man himself, Fed Chief Ben Bernanke, testified before the Joint Economic Committee that gross domestic product growth over the first half of 2008 "could even contract slightly." Though Bernanke still said the Fed expects economic activity to strengthen in the second half of the year, that perspective is predicated on the economic stimulus package approved this year having a significant impact. The problem with that prediction, however, is that it assumes those receiving a check from Uncle Sam will immediately turn around and spend it.[37]

'''The region's banking systems have so far remained largely immune to the financial stresses in the United States,''' the Regional Economic Outlook: Western Hemisphere report said, citing reliance on local deposits and limited exposure to structured financial products in the region's financial markets.[30] In the meantime, while the Fed has opened up the vault to offer "liquidity measures" to financial services companies -- and stepped up to help bail out investment banker Bear Stearns -- congressional leaders are moving forward with plans to offer beleaguered homeowners stave off foreclosure. Perhaps these efforts will help to soften the economic blow of a recession and make any such disruption shorter.[37]

The newly elected Bank of Japan-BOJ Governor Masaaki Shirakawa on Thursday called on G-7 countries to show a clear determination towards stabilizing the financial system.[27] Intoxicated by the belief that new financial forms of alchemy were transforming the system forever, banks created a bubble of unprecedented proportions.[26] The content on this site, including news, quotes, data and other information, is provided by Thomson Financial News and its third party content providers for your personal information only, and neither Thomson Financial News nor its third party content providers shall be liable for any errors, inaccuracies or delays in content, or for any actions taken in reliance thereon.[14] FT writes that '''''' The proposed changes form part of a 65-point action plan prepared by the Financial Stability Forum'''.[30] Further prompt actions by large financial institutions to disclose losses and repair balance sheets by raising capital when needed and mobilizing medium term funding will contribute to restoring confidence.[22] Colin Bradford from the Brookings Institution explained to Washington Post, "There's got to be something coming out of the weekend, a way to visibly assure public responsibility for trying to limit the damage that financial markets can do to our society." He added, "The pressure is on politicians this weekend to come up with an answer.[28] The debt issuance, the first significant program in many years, "is to provide additional liquidity to the local fixed-income markets, as well as to establish benchmark securities to foster the development of the domestic financial market," Lousteau told the IMFC. Chile's congress has authorized the issuance of up to $2 billion in debt. "These issuances are also in line with the government's efforts to improve the competitiveness of the exports sector," he said.[40]

"The Indian economy is hit, as the other ones, by the financial turmoil on the one hand and the increase in prices on the other hand. The answers India, as others, are trying to give to the situation are very important ones," he said.[42] Burton said the region could not expect to escape completely unscathed from the housing-related slowdown in the U.S. economy. '''While Asia maintains good growth momentum at this point, it's unlikely to delink entirely from the current slowdown,''' Burton said.[30] We won't know even if we are in a true recession -- defined traditionally as at least two consecutive quarters of negative GDP growth -- until we are well into it or even past it. By then, there are certain to be a chorus of voices claiming their unique insight and proactive plan is responsible for brining the economy around.[37]

3.5% to 4% growth is still pretty good, and far stronger than during recent world recessions, around the turn of the millennium and in the early 1990s. It feels gloomy because the balance of global growth has shifted away from the advanced economies.[43]

Prices in Chile have risen primarily due to a jump in global and local food prices, as well as higher energy prices.[40] "Rich countries' demand for biofuel is driving up food prices and is a big part of the problem," said Elizabeth Stuart, an Oxfam policy adviser. "Meanwhile, by cutting aid levels, they are doing precious little to be part of the solution."[6]

Higher energy prices, too, are driving up the cost of food, as well as stoking broader inflation. In recent months, rising food costs have lead to social unrest in several countries such as Haiti and Egypt.[12]

U.S. Federal Reserve chairman Ben Bernanke, Indian finance minister Palaniappan Chidambaram and the rest of today's participants called on countries to work together to spur a rebound. [10] Lipsky's warning comes at the end of a key summit of finance ministers in Washington, where the world's leading policy-makers convened to discuss solutions to the crisis.[26]

"The total number of the companies and consortia that participated in the prequalification process was 120 from various nationalities," said the ministry's petroleum contracts and licensing office. Groups Press for WaMu Board Ouster SEATTLE (AP) _ Activist shareholders' attempts to unseat several Washington Mutual Inc. board members will come to a vote Tuesday when the thrift, badly battered by the subprime mortgage crisis, holds its annual meeting and reports what are expected to be abysmal first-quarter results.[47] The report added that "The crisis is spreading beyond the U.S. sub prime market namely to the prime residential and commercial real estate markets, consumer credit, and the low to high grade corporate credit markets."[25]

The IMF is expected to discuss the issue in the future and Japan supports the U.S. position, a Japanese Finance Ministry official said.[34] U.S. Treasury Secretary Henry Paulson stressed the need for further reforms, rallying support from others of the 185-member IMF for "a smaller, more strategically focused" executive board.[34] Nobody is assuming that things will turn out even that well ' though some including the United States Treasury think the IMF is unnecessarily pessimistic.[32] Paulson specifically proposed cutting the number of the board's chairs from 24 seats to 22 by 2010 and to 20 by 2012. He proposed ending the current practice of permitting the five largest shareholders in the IMF to appoint their own directors and said the United States, the biggest shareholder, favors that all board chairs are elected.[34]

The participants in the meeting will vote on a package of measures intended to set IMF finances on a sound long-term footing. [18] The IMF was set up in 1944 to stabilise exchange rates and supervise the reconstruction of the world's international payment system.[4] At market exchange rates the inequalities would have been larger. The Bank expects to use the data to revise its estimate of the number of people living below the $1 a day international poverty line.[30] In an interview Saturday, China's central bank governor Zhou Xiaochuan said that the yuan's foreign exchange rate is increasingly decided by market forces. "Nowadays the force of the market is fairly big and we need to respect that," he said.[13]

Christine Lagarde is the French economy minister. "The fact that we are asking for more transparency, more disclosure by the banks, on the one hand; the fact that we're asking for better liquidity by the banks as well, is certainly going to help the current crisis," he said. [19] Cross-border interbank funding could recede, owing to pressures on banks in mature markets; and third, if growth slows in emerging markets, investment flows could retrench, promoting corrections in equity valuations and increased potential for currency volatility.[1] Under a proposal scheduled for consideration today, the fund may transfer the equivalent of 2.7 percentage point of voting power from industrialized countries to emerging economies.[52] With sluggish forecasts in developed economies, driven by the United State's intertwined credit and housing crises, the burgeoning emerging economies have a potent role to play.[17]

There is also a call for more effective financial supervision, in line with the recommendations of an international task force that reported to the G7. It is technical stuff, but it does at least attempt to address many of the problems that have been exposed by the last nine months of turbulence. [32] Regarding internal reforms, an issue that dominated the last IMFC meeting in October, the panel said it hoped governors would soon approve key voting and financial measures approved by the executive board.[21] In the minutes from the March 18 monetary policy meeting, some Fed officials were reported to say that "a prolonged and severe economic downturn could not be ruled out."[37]

"A World Bank spokesman declined comment on the documents but added that the bank is "committed to addressing its own shortcomings and will take disciplinary action against any staff members found responsible for wrongdoing." [15]

SOURCES

1. Financial crisis tests resilience of emerging, developing economies _English_Xinhua
2. AFP: G7 finance chiefs tackle global financial crisis
3. The News - The Student Newspaper of Choate Rosemary Hall
4. Bill Jamieson: Credit crunch myopia devalues IMF credibility - Scotsman.com Business
5. Investing | Africa - Reuters.com
6. The Associated Press: IMF Head Warns About Food Prices
7. AFP: IMF meets as global economy weakens
8. World leaders show unity as credit crisis drags on | Reuters
9. IMF: Challenges facing world economy require close cooperation_English_Xinhua
10. globeandmail.com: IMF calls for action on food inflation
11. Business Day - News Worth Knowing
12. AFP: IMF warns rising food prices raising risk of war
13. DJ G7, IMF Concerns About Financial Crisis Shift To Forex Mkts - Onet.pl Wiadomo'ci - 13.04.2008
14. IMF says global economic crisis requires strong action, cooperation UPDATE - Forbes.com
15. Let the finger-pointing begin - Paul Krugman - Op-Ed Columnist - New York Times Blog
16. IMF Says Us Crisis is 'largest Financial Shock Since Great Depression'
17. Group Therapy - Forbes.com
18. World Finance Leaders to Meet as Concerns on Global Economy Grow
19. VOA News - Economic Policy Makers Discuss Measures to Restore Market Confidence
20. News | Africa - Reuters.com
21. IMF urges strong action on crisis | NEWS.com.au Business
22. IMF steering committee communique | Reuters
23. :: News on AIR ::
24. IMF says China and India not immune
25. SteelGuru - News
26. IMF's financial general plots strategy to end the credit crisis - Telegraph
27. RTTNews - Forex News top stories, Forex Trading, European Market Update, Currency Market Update, Forex trading.
28. Washington Weekend Meetings To Tackle Major Global Problems | April 14, 2008 | AHN
29. ITAR-TASS
30. News & Broadcast - Press Reviews
31. AFP: World economic leaders act to counter financial, food crises
32. BBC NEWS | Business | Analysis: What to do about credit and food
33. Financial leaders converge in Washington - UPI.com
34. LEAD: IMF panel urges Japan to go further in structural reforms+
35. International Monetary Fund: World economy likely to lose momentum - Nashville Business Journal:
36. reportonbusiness.com: Should we fear sovereign wealth funds?
37. Flagler - newsjournalonline.com
38. Free Preview - WSJ.com
39. Turkey's post-stand-by alternatives to be difficult, financial analysts say
40. Chile Bond Issues Will Help Reduce Pressure On Peso - IMF Rep
41. Display Story
42. » India's handling of inflation to be closely tracked - Thaindian News
43. Gloom reigns but world is not about to go pop - Times Online
44. IMF urges governments to watch inflation as they deal with global financial crisis - International Herald Tribune
45. The Associated Press: AP Top News at 5:32 a.m. EDT
46. HIGHLIGHTS: Remarks from officials at IMF/World Bank meetings | Reuters
47. AP Business NewsBrief at 3:01 p.m. EDT - - insurancenewsnet.com
48. EuroNewsEuroNews : World finance chiefs focus on economic crisis
49. Europe should consolidate its IMF seats-IMFC head | Markets | Bonds News | Reuters
50. IMF cuts Swiss 2009 growth outlook to below 1 per cent- International Business-News-The Economic Times
51. Chavez says Venezuela could afford to buy some of IMFs gold reserves - International Herald Tribune
52. Bloomberg.com: Latin America
53. World leaders in bold economic stand | The Australian
54. YouTube - IMF chief voices food fears

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