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imf Monday, 5 October, 1998, 10:44 GMT 11:44 UK
Crunch time for the IMF
imf HQ
All eyes turning to IMF headquarters in Washington this week
It is crunch time for the International Monetary Fund (IMF) as its annual meeting gets into full swing this week amid growing calls for its overhaul.

Criticism of the way the IMF has handled financial crises over the last year and ideas for new international monetary structures have characterised a number of meetings of developed and emerging nation finance officials this weekend.

There is a growing consensus that the IMF and World Bank, created in the 1940s as part of the Bretton Woods system to ensure world financial stability, are not up to the task in the late 1990s.

Ministers and officials will be looking to the IMF, and the World Bank which is also meeting, to embrace reforms to its structure and the international monetary system.

New regulator

Some world leaders, including British Prime Minister Tony Blair, want a new global organisation to regulate financial markets.

UK Chancellor, Gordon Brown, is calling for the creation of a global financial watchdog, designed to supervise the world's financial markets and prevent future international economic crises.

James Wolfensohn
James Wolfensohn, World Bank also under scrutiny
Echoing earlier calls by UK prime minister Tony Blair, Mr Brown said the "financial architecture has to be rewritten."

On Friday, President Clinton proposed a new pre-emptive standby fund so that money could be lent to countries with troubled financial systems before they went into crisis, rather than bailing out nations after the fact.

The G24 group of developing nations has weighed in on Sunday saying the international monetary system needs to be greatly strengthened. The group wants action to see the IMF and World Bank work better together and called for G24 involvement in a taskforce to reform the IMF.

The G24 includes Brazil, India, Nigeria, Iran, Mexico and Argentina.

James Wolfensohn, head of the World Bank, told the BBC that he would consider brokering a merger with the IMF to help counter a world recession.

IMF defends itself

Michel Camdessus, the head of the IMF, last week defended the way the organisation has handled the world currency crisis.

camdessus
Michel Camdessus, defends his IMF
Mr Camdessus rejected suggestions that the IMF had responded badly to the crisis.

He said: "We have possibly made mistakes in certain countries but that was because we had to act in emergency situations. As soon as we have realised these mistakes, we have corrected them."

Mr Camdessus deflected scrutiny onto the seven leading industrialised countries, the G7, which met on Saturday to discuss their role in staving off the spreading contagion.

Mr Camdessus said it was their responsibility to push for stronger growth by cutting interest rates to offset the recessions in Asia and Russia.

"We need a new consensus among all the world players to find a way out of the crisis. The G7 must do their job as the key engine for growth."

G7 finance ministers acknowledged their countries' role in keeping the global economy from sliding further into financial and economic crisis.

But they want a "strengthened capacity" of the IMF so it can better help troubled countries restore stability.

The IMF predicts that world growth will slow to only 2% this year, the lowest in seven years, with only a slight rebound to 2.5% next year.

Funding problems

Mr Camdessus has also stressed the need for the IMF to be properly funded, and urged governments to increase their contributions.

The US Congress has been holding out on its $18bn in IMF dues, vital for the IMF to continue its programs after its coffers have been all but emptied helping Russia and Asian nations through their crises.

Speculation has been rife that a bail-out package will soon be announced for Brazil, coordinated by the US and the IMF.

182 countries around the world are IMF members, and can draw on its funds if they are in financial trouble.

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