IMF worried about oil price rises

By Steve Evans
BBC North America business correspondent

Higher oil prices act like a tax on spending

The IMF has voiced strong concern at a Washington meeting about the dangers of rising oil prices to global prosperity.

Ministers said that what they see as volatility in the oil market had increased the risk of derailing the economic recovery in the world economy.

The IMF reckons that the world economy will grow at about 5% this year, the fastest for three decades.

But it sees problems ahead - higher oil prices act like a tax on spending and so jeopardise growth.

British Chancellor of the Exchequer Gordon Brown, who chairs the IMF's pivotal Monetary and Financial Committee, said that the recovery had been uneven and that action must be taken to address the risks to that recovery, particularly in what he called "the most vulnerable countries" - poor countries which use a lot of oil.

Diagnosing the problem, though, is a lot easier than solving it. Ministers want producers to increase oil output, though production is already near capacity.

They also want what they call "transparency" in the market - by which they mean more accurate information about the true state of supply and demand.

Speculators thrive when uncertainty exists.

On other matters, ministers are making some progress towards writing off the debts of poor countries.

The United States is now more amenable to some proposals with that result. No deal has yet been done but it is closer now than it was.