The managing director of the International Monetary Fund, Mr Horst Koehler said yesterday the world economy may have finally turned the corner but for now it needed to be nurtured with increased vigilance and decisive policies.
"Achieving a balanced recovery and a return to sound and sustained global growth, in particular requires broadening our focus from the short-term requirements to the serious underlying problems that many of our economies continue to face," Mr Koehler told world finance ministers and central bankers at the opening of the IMF and World Bank annual meetings in Dubai.
Setbacks in global trade talks in Cancún, Mexico earlier this month had not strengthened global confidence, Mr Koehler said, urging rich and poor countries to overcome their divide on opening up agricultural markets and resume talks.
"More than ever, success will depend on the leadership of the major industrial countries - and agriculture remains the key to unlocking decisive progress," he said.
His comments were echoed by Mr James Wolfensohn, president of the World Bank, who said yesterday that this month's failure of world trade talks at Cancún underlined the need to give developing countries a greater voice in the global economy.
Mr Wolfensohn, speaking after meetings in Dubai which made little progress on increasing developing countries' say in the bank, came close to siding openly with poor nations against the rich. "At Cancún, developing countries signalled their determination to push for a new equilibrium," Mr Wolfensohn said. "This is a world out of balance." His comments followed a complaint by Mr Trevor Manuel, the South African finance minister who chairs the bank's ministerial steering committee, about slow progress in plans to give developing countries a bigger voting weight and more seats on the World Bank's board.
Officially, the bank itself stays out of such debates, saying they are the preserve of its shareholder states. But one official present at the ministerial committee said that Mr Manuel had described the bank as an institution pleading for external political pressure to help it to change.
The US has taken the lead in blocking proposals that would reduce its voting weight, pointing out that the smaller European nations, rather than the US, are over-represented at the bank relative to their size in the global economy.
Mr John Snow, US treasury secretary, said he was open to the possibility of admitting China to the Group of Seven, which dominates international economic decision-making and meets just before each IMF-World Bank meeting. This year's meetings were dominated by discussions of exchange rates clearly aimed at China's fixed currency regime, though China is not a member of the G7. "The issue of that membership gets reviewed from time to time and I think we're open to looking at the whole question," Mr Snow said. "But there are criteria and tests and standards that you have for getting into these organisations." The G7 has invited Russia to join parts of its meetings, making it a Group of Eight. China has not been invited.
A Group of 20, including large emerging market countries such as China, India and Mexico, was set up in the aftermath of the Asian financial crisis of 1997-98. But members say that the G20, which generally meets at different times from the IMF and World Bank, has remained a discussion forum rather than a decision-making body. - (Financial Times Service)
