December 03, 2008
Recession reports - IMF urged to keep closer watch
Reuters reported that World finance officials have 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 that global financial instability had increased and inflation risks had risen due to a sharp run up in the cost of food and other commodities.
The International Monetary and Financial Committee in a post meeting said that "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.”
As rich countries struggle to get a handle on financial turmoil that has rocked markets for nine months and worry the US 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 US economy into recession. IMF said that developing economies had shown resilience in the face of the crisis sparked by mounting US mortgage defaults, but cautioned that inflationary risks had picked up. It said that "For many counties, containing inflation and addressing vulnerabilities remain key priorities.”
Concerns over rising prices for food and other commodities and related shortages of key staples, has shaken developing economies worldwide. 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.
Mr Tommaso Padoa Schioppa chairman of IMF said that "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.”
