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EDITIONS
Monday, 30 April, 2001, 03:34 GMT 04:34 UK
IMF seeks to avert crises
IMF director Horst Koehler and Gordon Brown, chairman of the IMFC
Koehler and Brown: Plans for prevention and co-operation
By BBC News Online's David Schepp in Washington

The International Monetary Fund (IMF) has endorsed a programme that will establish procedures to avert financial crises such as the one seen in Asia in 1997-98.

The IMF's policy-setting panel, the International Monetary and Financial Committee (IMFC), said in a written statement during its annual spring meeting in Washington that "strong and effective crisis prevention is a top priority".


A stronger focus on crisis prevention should help to reduce the frequency and severity of crises, as well as the need for more and bigger rescue packages

IMF director Horst Koehler
IMF director Horst Koehler has made crisis prevention the focus of his leadership at the loan-making institution.

"The IMF needs to work even harder to put crisis prevention at the heart of its activities," Mr Koehler said in his presentation to the panel.

"Highest on our agenda for the coming months should be further work on early warning systems."

The IMF was widely criticised for its inability to react quickly to Asia's past woes.

Protesters
Protesters were outnumbered by police
Mr Koehler said the reforms would make multi-billion dollar bailout packages, such as those seen during the Asian crisis, less likely in the future.

"A stronger focus on crisis prevention should help to reduce the frequency and severity of crises, as well as the need for more and bigger rescue packages," Mr Koehler said.

Earlier on Sunday, a presentation by World Bank officials noted that Asian countries affected by the crisis have for the most part rebounded and resumed their growth.

In a written statement the policy-setting panel said the establishment of an International Capital Markets department would help improve early warning capabilities and strengthen crisis prevention.

Prodded by US

The IMF's decision to adopt such an early warning programme is largely believed to be the work of the US administration.

US Treasury Secretary Paul O'Neill, speaking to IMF officials, said that such a programme would help avert such financial crises from developing in the first place.


Instead of retreating from global co-operation we are strengthening and by strengthening global co-operation we are better placed to deal with difficulties when they arise

Gordon Brown, IMFC chairman and British Chancellor
On Saturday, the IMF and World Bank gave their blessing to loan packages for Turkey and Argentina, which are smarting from their own financial crises. Turkey has seen the value of its currency fall by 50% in recent months.

"Both countries have substantially strengthened their policies and they deserve support. The remaining details of the programs will be sorted out in a few days," Koehler said during a late-afternoon press conference.

Global slowdown

In a statement following the meeting of IMFC officials, the committee said it "agrees that short-term prospects for global growth have weakened significantly since its September 2000 meeting in Prague.

"The committee considers it likely that the slowdown in global growth will be short-lived, though it notes that the downside risks have increased."

Paul O'Neill, US Treasury Secretary
O'Neill has insisted on the need for early warning system
IMFC Chairman Gordon Brown said that countries should work together to lessen the effects of a slowing global economy.

"Instead of retreating from global co-operation we are strengthening, and by strengthening global co-operation we are better placed to deal with difficulties when they arise," Britain's finance minister said.

He added that he was "cautiously optimistic" on the prospects for world growth.

Mr Brown also criticised those who oppose globalisation and free trade. His comments took place among protests in Washington, which free-trade opponents largely ignored following violent clashes last week in Quebec City.

This weekend's meeting drew only several hundred protestors, who were largely outnumbered by police and journalists.

See also:

29 Apr 01 | Business
14 Mar 01 | Business
14 Sep 00 | Business
18 Feb 01 | Business
16 Feb 01 | Business
31 Mar 00 | Business
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