Thaindian News

Washington, April 25 (IANS) With the global economy still not out of the woods after its worst crisis in decades, the IMF’s policy steering committee urged a collaborative and consistent approach to reform of the international financial system.
“The global economy seems to be recovering. The worst is definitely behind us. But, we are not out of the woods yet,” said Youssef Boutros-Ghali, chairman of the International Monetary and Financial Committee (IMFC) Saturday.

“We see a strengthening of economic recovery, but we also see an unevenness in this recovery, unevenness within countries, and unevenness between countries.”

Reserve Bank of India (RBI) Governor Duvvuri Subbarao represented India at the steering committee of the 186-nation International Monetary Fund (IMF) in place of Finance Minister Pranab Mukherjee.

Noting that problems in the financial sector were at the heart of the recent global crisis, the IMFC said in a communiqué, “Strengthening financial regulation, supervision, and resilience remains a critical but as yet incomplete task.”

“We agree to redouble efforts to forge a collaborative and consistent approach for a stable global financial system that can support the economic recovery.”

Boutros-Ghali said the IMF had changed in recent years, with emerging markets having a bigger say. “It’s a different institution,” he told reporters after Saturday’s meeting.

IMF chief Dominique Strauss-Kahn also warned that advanced economies, trying to plug loopholes in financial regulation, risk creating inconsistent regulatory regimes that result in fresh problems of coordination.

“The rules of the game have to be almost the same or they have to be consistent,” he told reporters.

Strauss-Kahn said the world faced several key issues as it moved into a fourth phase of the crisis - continued high unemployment, rising official debt, and the risk from increased capital flows to emerging markets.

He touched on three key issues for the IMF as the global economy moves into this rebuilding phase: Financial sector reform, Mutual assessment of G-20 economies and IMF quotas and governance.

IMF said policymakers committed to completing governance and quota reform at the IMF before January 2011. “The aim is to reflect the shift in world economic power toward dynamic emerging market economies through a redistribution for quotas-which reflect the contribution of each member to the Fund and the relatively voting power.”

The Group of Twenty (G-20) industrialised and emerging market countries held meetings with the IMFC in Washington for the first time, strengthening the collaboration between the two groups. The Group of 24 developing countries also met to discuss responses to the global crisis and its aftermath.