Open

Coming up

Don't miss

Replay


LATEST SHOWS

AFRICA NEWS

Search of Air Algerie crash site continues

Read more

MEDIAWATCH

Sarkozy, Hollande and the scooter wars

Read more

MEDIAWATCH

Confusion online over Air Algérie flight

Read more

THE WORLD THIS WEEK

The World This Week - July 25th, 2014 (part 2)

Read more

THE WORLD THIS WEEK

The World This Week - July 25th, 2014

Read more

REPORTERS

Halal tourism on the rise

Read more

ENCORE!

Tunisia's Carthage International Festival turns 50

Read more

FRANCE IN FOCUS

WWI Centenary: the battle for Verdun

Read more

THE BUSINESS INTERVIEW

When big companies want to do good

Read more

  • Limited 12-hour humanitarian truce takes effect in Gaza

    Read more

  • Video: No investigation apparent at MH17 crash site

    Read more

  • In pictures: Devastation, debris at Air Algérie crash site

    Read more

  • Paris march for Gaza to go ahead Saturday despite police ban

    Read more

  • Kerry due in Paris for new round of Gaza ceasefire talks

    Read more

  • Washington Post reporter and his wife arrested in Iran

    Read more

  • French families grieve for Algerian plane crash victims

    Read more

  • Lithuania’s Navardauskas wins 19th stage of Tour de France

    Read more

  • LA Times wipes France off the map in air crash infographic

    Read more

  • Fans electrify the mood as Tour de France crosses the Pyrenees

    Read more

  • French lawyer files complaint against Israel at ICC

    Read more

  • Protest against Gaza offensive turns deadly in West Bank

    Read more

  • Halal tourism on the rise

    Read more

  • Ukraine names acting PM after Yatseniuk's shock resignation

    Read more

  • BNP to pay $80 million for defrauding Dept of Agriculture

    Read more

  • Deadly strike on UN shelter in Gaza Strip

    Read more

  • Pope meets Christian woman sentenced to death in Sudan

    Read more

IMF reiterates warning on inflation crisis

Latest update : 2008-04-13

After the International Monetary Fund (IMF) warned against serious risks due to inflation, world finance officials urged the organisation to keep closer tabs on the global economy to prevent future crises.

WASHINGTON, April 12 (Reuters) - World finance officials on
Saturday urged the International Monetary Fund to keep closer
tabs on the global economy in the hope future crises like the
one currently shaking world markets can be prevented.
 

After one of its twice-yearly meetings, the IMF's 24-nation
steering committee said global financial instability had
increased and inflation risks had risen due to a sharp run-up
in the cost of food and other commodities.
 

"Policy-makers should continue to respond to the challenge
of dealing with the financial crisis and supporting activity,
while making sure that inflation is kept under control," the
International Monetary and Financial Committee said in a
post-meeting communique.
 

As rich countries struggle to get a handle on financial
turmoil that has rocked markets for nine months and worry the
U.S. dollar may have fallen too far, emerging and developing
nations wondered whether they would be spared from a crisis
that may have already pushed the U.S. economy into recession.
 

The IMFC said developing economies had shown resilience in
the face of the crisis sparked by mounting U.S. mortgage
defaults, but cautioned that inflationary risks had picked up.
 

"For many counties, containing inflation and addressing
vulnerabilities remain key priorities," it said.
 

Concerns over rising prices for food and other commodities,
and related shortages of key staples, has shaken developing
economies worldwide, sparking often-violent protests. Haiti's
government fell on Saturday after senators fired Prime Minister
Jacques Edouard Alexis following a week of food riots.
 

Developing countries called on the IMF and World Bank to
stand ready with emergency funding to help the poorer nations
of the world in case financial market woes spread to their
economies and the food crisis worsened.
 

Just 12 months ago, finance ministers and central bank
chiefs were basking in five consecutive years of strong world
growth, unaware a U.S. housing boom was about to go bust,
triggering what may be the biggest financial shock since the
Great Depression.
 

CHANGING ROLE
 

All of this has taken place at a time the IMF,
traditionally a lender of last of resort in times of crises,
has sought a new role for itself amid a sharp decline in
borrowing from emerging and developing economies.
 

The Washington-based lender has also sought to boost its
relevance by giving emerging economies China, India, Brazil,
Mexico and South Korea more voting power in the institution.
 

While voting power changes and a new financial model aimed
at putting the fund on sounder footing still need the approval
of all of the IMF's 185 member countries, they were endorsed by
the IMFC.
 

"The fact that the most relevant economic and financial
multilateral institution in the world shows the capability to
reform itself at this very moment, constitutes by itself a
response to the crisis and an indication that a global crisis
has to be addressed with a global view," IMFC Chairman Tommaso
Padoa-Schioppa told a news conference.
 

While emerging economies such as China, India, Mexico,
South Korea and Brazil support the changes in their relative
voting power, some nations that stand to lose from the shift --
such as Russia, Argentina, Saudi Arabia, Iran and Egypt --
oppose the move, saying it does not go far enough.
 

The changes, to be decided by April 28, will complete a
number of institutional reforms that have been in the works for
years. With reforms nearly done, financial leaders said it is
time for the IMF to focus on financial stability.
 

POLICING ECONOMIES
 

But even as ministers called for more IMF attention to
policing the global crisis, advanced countries complained its
growth forecasts for 2008 and 2009 were overly pessimistic.
 

"I think it's useful that the fund took a very dry and
realistic view of the situation," Padoa-Schioppa said in
defense of the IMF.
 

IMF Managing Director Dominique Strauss-Kahn said
forecasting growth was especially tough in the current
environment. "I don't think really that the difference between
0.1 or 0.2 has such an importance," he said.
 

There was widespread acknowledgment, however, that risks to
global growth had risen with a sharp slowdown in the U.S.
economy.
 

"The risk that the U.S. will fall into a recession in 2008
has increased and real GDP growth in the euro area is also
slowing down," European Monetary Affairs Commissioner Joaquin
Almunia said.

Date created : 2008-04-13

COMMENT(S)