IMF, World Bank to Hold Final Round
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WASHINGTON (AP) _ World finance leaders headed into a final round of talks Sunday after deciding to develop a new approach to resolving debt crises that have roiled economies from Asia to South America for the past six years.
Ministers from the 184 nations that are members of the International Monetary Fund and the World Bank are gathering at Constitution Hall near the White House for the formal meetings of the two organizations.
After welcoming remarks by Treasury Secretary Paul O’Neill, IMF chief Horst Koehler and World Bank President James Wolfensohn, 39 nations have requested the floor, starting with the United States and ending with Sri Lanka. Each speaker gets six minutes to speak for his or her nation or 10 minutes if the speaker represents a regional group.
The two organizations arranged for a television studio to beam back home speeches of ministers who chose not to address the formal gathering.
The thousands of demonstrators the IMF-World Bank meetings attract staged mainly peaceful protests Saturday. Only a few arrests were reported, in contrast to 649 arrests Friday after clashes between police and demonstrators.
While critics of the two organizations complained wealthy nations were not providing sufficient money to help poor countries, Wolfensohn disagreed.
The United States and the European Union, he said, have pledged a combined $12 billion in foreign aid over the next three years, which would be enough to launch a number of initiatives to benefit the poor. He also said he was confident nations would start writing checks to make up a $1 billion shortfall in a debt relief program aimed at poor countries.
That did not impress debt relief advocates. Julia Tilford, a spokeswoman for Oxfam International, said the new money was a ``patch up job for what is a failing initiative″ that needed fundamental reforms.
The IMF-World Bank meetings came against a backdrop of rising worries about the uncertain economic recovery from last year’s recession. Chief concerns are plunging stock markets, Latin America’s debt crisis and possible war in Iraq.
The finance ministers who serve as the IMF’s board of directors sought to project an optimistic outlook. O’Neill said he felt ``the worst was over for the U.S. economy and we are back on the path to growth.″
In an address to the Institute of International Finance, which represents the world’s biggest banks, O’Neill appealed to the group to help government officials come up with an acceptable approach to national bankruptcies.
``Every one of you in this room must engage in this effort. We owe that to the people who have suffered from the chaos of the current system,″ he said.
But financial officials from Japan sent mixed signals about how Japan planned to deal with its troubled banks and revive the world’s second largest economy.
The finance ministers took a major step Saturday toward overhauling the global financial system, which they have been tinkering with since the Asian financial crisis of 1997-98 plunged 40 percent of the world’s economy into recession.
The ministers directed the IMF to work on creating a process by which nations with debts they are unable to pay can declare bankruptcy and force creditors to negotiate more lenient terms instead of defaulting.
Large banks that make loans to developing countries oppose making it easier for those nations to win new repayment terms.
The proposal will be presented to the IMF’s directors in April and ultimately will require approval from the 184 IMF members since it involves a change in the organization’s operating rules.