IMF fails to resolve disputes on fixing global economy (fwd)

[Robert Weissman <rob@essential.org>]

IMF fails to resolve disputes on fixing global economy

              By Martin Crutsinger, Associated Press, 04/27/99 21:58

              WASHINGTON (AP) - The International Monetary Fund failed
              Tuesday to find agreement on how to prevent or at least
better
              manage future Asian-style currency crises.

              Finance ministers and central bankers from the seven major
              industrial countries couldn't even agree on measures for
              ending the recession being experienced by a third of the
world
              because of steep currency devaluations.

              Instead, the 182-nation IMF's policy-setting interim
committee
              issued a 10-page final communique at the conclusion of its
              spring meeting pledging to continue efforts to resolve
              competing proposals put forward by the United States and
              other industrial countries.

              It hailed as its one major achievement the creation of new
              contingent credit lines that could provide billions of
dollars for
              warding off financial panic to countries pursuing sound
              economic policies.

              But agreements could not be reached on involving the private
              sector in sharing the cost of future bailouts or policing the
              borrowing practices of emerging countries.

              The United States, led by Treasury Secretary Robert Rubin,
              favored a more market-oriented, case-by-case approach for
              private sector involvement. Britain and other nations
preferred
              specific rules defining the obligations of investors if their
 bets
              on emerging markets went bad.

              Other issues left on the table included ways to better manage
              wild swings in currency values both in developing countries
              and industrial nations. Japan and Germany pushed for more
              coordinated efforts among countries to manage currency
              levels; the United States objected.

              Even in areas where there was widespread agreement, such
              as the need to provide greater debt relief for the poorest
              countries, the IMF could not resolve how much of its gold
              reserves should be sold to help finance the process, or how
              much money wealthy nations would be willing to contribute to
              the effort.

              Seth Amgott, Washington representative for Oxfam, a
              humanitarian relief organization, expressed disappointment
              that more progress was not made on the debt issue.

              ''They have shown repeatedly that they are good at producing
              rhetoric on debt relief. It is an open question whether we
will
              get the resources and if there is the political will,''
Amgott said.

              However, IMF Managing Director Michel Camdessus told
              reporters at a news conference late Tuesday night that the
              debt relief issue, which has been debated since 1996, would
              be resolved soon.

              Debt relief was also expected to be taken up when President
              Clinton and other leaders of the world's seven largest
              economies hold their annual economic summit in mid-June in
              Cologne, Germany.

              Regarding the current economic problems, Japan and Europe
              rejected U.S. suggestions that they needed to do more to
              stimulate growth, prompting a blunt response from the United
              States.

              In his speech Tuesday to the IMF directors, Rubin noted that
              America's trade deficit has soared to record levels,
resulting in
              the loss of more than 300,000 U.S. manufacturing jobs, as a
              result of the nearly two years of global turmoil.

              Japan's trade surplus was increasing and Europe's trade
              balance was remaining essentially unchanged during this
              time, he complained.

              ''The United States has borne the bulk of the burden of the
              global current-account adjustment in response to the Asian
              crisis,'' Rubin said. ''This situation cannot continue
indefinitely.
              Japan and Europe must boost domestic demand-led growth.''

              Rubin's unusually frank message reflected U.S. frustration at
              failing to win greater commitments by Japan and Europe to
              spur their domestic economies to take pressure off America's
              huge trade deficit.

              The Group of Seven finance ministers and central bank
              presidents had pledged after talks Monday to strive for
greater
              cooperation to promote global growth.

              But their comments Tuesday underscored that there was no
              agreement on just what that vague promise meant. Both
              Japanese and European officials rejected U.S. suggestions
              they need to do more to promote growth.

              They noted that the new European Central Bank, which
              handles monetary affairs for the 11 countries switching to
the
              new common euro currency, recently cut interest rates by a
              half percentage point, and Japan has reduced its rates to
              virtually zero while also implementing a massive government
              spending program.

              ''Japan has been forcefully implementing'' the stimulus
              package, Japanese Finance Minister Kiichi Miyazawa said.

              German Finance Minister Hans Eichel expressed worries
              about the U.S. economy and the impact on the high-flying
              American stock market and dollar if growth slows too abruptly
              later this year.

              ''In the interests of the United States and the world
economy,
              it will be important to avoid an excessively sharp adjustment
              with setbacks in the financial and foreign exchange
markets,''
              Eichel said.