IMF appeals for action to maintain global recovery
AFP, Washington
With the global economy under threat from rising oil prices and sharp regional growth differences, the International Monetary Fund appealed to governments Saturday to act boldly to preserve a worldwide recovery. "The world economy is strengthening but the recovery has been uneven," British Chancellor of the Exchequer Gordon Brown said after a meeting of the IMF's policymaking International Monetary and Financial Committee, of which he is chairman. "And with oil prices doubling and imbalances worsening, we agreed that action must be taken to address risks to the recovery." The committee in a final statement also looked ahead to what it hoped would be funding for further debt relief earnarked for the world's poorest countries but made no mention of concrete measures having been approved Saturday. But Brown cited a several proposed initiatives for more vigorous measures to ease the debt burden carried by developing countries, notably obligations to multilateral lending bodies such as the IMF and the World Bank. "There is a growing consensus that multilateral debt relief has to be dealt with as soon as possible," Brown said. He pointed in particular to a statement adopted here Friday at a separate meeting of top financial officials from the Group of Seven, describing it as "very signficant progress." The G7, comprised of Britain, Canada, France, Germany, Italy, Japan and the United States, said it was committed "to addressing the sustainabilty of debt of the poorest countries" and would prepare a progress report by the end of the year. The IMF committee in its statement took aim at three factors clouding the horizon for the world economy, which is projected to expand five percent this year before losing steam in 2005 in the face of oil market volatility. It said in effect that the United States had to take steps to reduce its gaping budget deficit, which tends to drive up interest rates as Washington borrows money to finance the shortfall, while Europe and Japan needed to implement macroeconomic reforms to boost growth. A third problem highlighted by the committee was the need for greater currency flexibility in Asia, notably China where a peg with the dollar is seen as undervaluing the yuan and thereby distorting regional trade.
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