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Sunday, 18 November, 2001, 02:30 GMT
US seeks fast action on terror funds
IMF chief Horst Koehler (l) UK Chancelor Gordon Brown and US Treasury Secretary Paul O'Neill (r)
Finance ministers agreed to tackle terrorist funds
David Schepp

US Treasury Secretary Paul O'Neill has called upon "the sovereign nations of the world" to take action to thwart terrorists' ability to finance their operations - and to do so by 1 February.

Mr O'Neill said he recognises that many countries were "startled" by the demand to enact such measures so quickly when he raised the idea during a lunchtime meeting during Saturday's meeting of finance ministers in Ottawa.

"It's consistent with what I think we owe to the people of the world not to take a longer time than that to take that action," he said, adding there was agreement "without exception over the sense of urgency.

"There's been a consistent unanimity that will work together and quickly," to put systems in place to identify terrorists and block their financial assets.

Economic growth

In speaking to reporters, Mr O'Neill also touched upon the much-debated issue of economic forecasts recently issued by the International Monetary Fund (IMF).

On Thursday, the IMF, a world lending body, said the world economy is heading for a sharp slowdown, led by the economic downturn in the US and exacerbated by recent terror attacks in New York and Washington.

IMF managing director Horst Koehler
Horst Koehler's economic predictions called "too pessimistic"
In releasing the forecast, IMF managing director Horst Koehler said US economic growth would crawl to 0.7% in 2002, much lower than previous estimates of 2.2%, issued just a month ago.

Mr O'Neill, upon hearing Mr Koehler's predictions on the day they were released took issue with them, calling them too pessimistic. He reiterated his objection on Saturday, adding that he believes his view will prevail.

The disagreement seems to be very amicable. Mr O'Neill and Mr Koehler have a bet - the loser buys dinner - on who is right.

It is a bet that Mr Koehler hopes to lose.

Restoring the US economy

The former Alcoa chairman also said he told colleagues gathered in Ottawa for meetings of the G-20, IMF and World Bank about US efforts to reinvigorate its ailing economy.

Mr O'Neill said he expects the US will neither run a deficit nor experience a surplus during fiscal year 2002, partly due to lowered tax receipts because of the souring economy,

He hastened to add, however, that the reduction is also attributable to the tax cuts passed by Congress last spring and signed into law by President George W Bush in June, which the government has said will act as a stimulus for the nation's economy.

In addition, Mr O'Neill said, there has been agreement in Washington to raise government spending by 8%.

"And on top of that [there is] the prospect in the very near term of an agreement of a $75bn stimulus package, which will provide further energy to our economy."

Global slowdown, global cooperation

Speaking separately, UK Chancellor Gordon Brown, who heads the IMF's International Monetary and Financial Committee (IMFC), said that despite the global slowdown, rich nations of the world must remain focused on the goals of reducing poverty and strengthening international cooperation.

In its communiqué, issued after its Saturday afternoon meeting, the IMFC said "continuing vigilance is needed" in monitoring the slowdown of the world economy.

"It is essential that the international community stands ready to take timely action to maintain stability and invigorate growth," the document said.

Mr Brown added that while poorer economies may require intervention to counter economic slowing, advanced economies should rely on their market-based systems to restore health.

See also:

15 Nov 01 | Business
IMF sees global slowdown
17 Oct 01 | Business
Economic leaders choose Ottawa
10 Oct 01 | Business
Economic fallout
05 Oct 01 | Business
G7 plans to tackle slump
26 Sep 01 | Business
IMF warns on global economy
17 Sep 01 | Business
World Bank and IMF cancel talks
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