US urged to lift investor confidence

Nigeria's Ciroma (right) backed Argentina's efforts for reform

By David Schepp BBC News Online North America business reporter in Washington

The Group of 24 finance ministers (G24) have called upon the US to take "prompt and decisive actions" to restore investor confidence, which has plummeted amid corporate scandal.

Failure to do so they warned could have "far-reaching implications on the prospects for global growth," the G24 said in a communiqué following a meeting on Friday.

They also urged the European Central Bank (ECB) to ease its current rigid stance on interest rates, saying such inflexibility threatens to derail the world's nascent economic recovery.

The finance ministers, who represent developing countries on four continents, expressed grave concern over the sharp tightening of available financing for emerging economies particularly those of several Latin American nations.

While acknowledging that some of the woes are caused by "underlying economic vulnerabilities", the group said the unpredictability of currency exchange rates and access to capital also hamper development.

The ministers also said depressed commodity prices and protectionist practices by industrialised countries in such areas as textiles and clothing, agriculture and steel have intensified difficulties for developing nations.

Argentina's woes

The group's criticism of trade policies by rich nations followed comments made earlier in the day by International Monetary Fund (IMF) and World Bank officials.

Speaking for the World Bank, chief economist Nicholas Stern said western nations need to begin playing fairly if they expect developing countries to open up their markets.

In its communiqué, the G24 expressed serious concern over Argentina's economic woes, noting the South American nation is entering its fifth year recession and that unemployment is nearing 22%.

In contrast to the IMF, which has been critical of Argentina's economic policies and has withheld aid over its concerns, the G24 called Argentina's revised economic plan "sound".

The ministers urged the international community to help Argentina to regain market confidence and to press the IMF to quickly settle its differences in order to ensure a prompt economic recovery.

Attending the gathering of the G24 were World Bank president James Wolfensohn and IMF managing director Horst Koehler.

Both have been highly critical of western economies which have imposed tariffs and other barriers to trade, saying market access is vital to alleviate poverty in developing nations.