IMF panel `strongly` committed to address sovereign risks+

WASHINGTON, April 24 Kyodo -
The International Monetary Fund's policy-steering panel on Saturday signaled
its ''strong'' commitment to address ongoing risks to the global recovery,
including sovereign debt problems, with Greece's fiscal crisis highlighting the
dangers.
''We are strongly committed to ensuring sustainable public finances and
addressing sovereign debt risks,'' the International Monetary and Financial
Committee said in a communique after its one-day biannual meeting in
Washington.
Hobbled with surging borrowing costs, Greece on Thursday asked for a rescue
package put together by the European Union and the IMF to be activated.
The IMFC also urged an acceleration of work to overhaul the Washington-based
multilateral lender's governance, including its voting system, to give emerging
economies a greater say in decision-making.
As for the state of the global economy, the IMFC saw recent signs of a
''strengthening economic recovery'' as encouraging but acknowledged that there
remain ''many challenges'' that need work collaboratively.
IMF Managing Director Dominique Strauss-Kahn said at a press conference that
the recovering economy is good news but also warned against excessive optimism.
''We shouldn't lose any kind of caution, we should really take into account all
the downside risks ... even if any kind of a double dip has never been the
baseline scenario for the fund,'' he said.
Strauss-Kahn said the overriding tasks for the IMF for the coming months are
''unemployment, which is still rising in many countries'' in the industrialized
world and ''the heavy burden of debt'' in advanced economies.
Meanwhile, Chinese central bank chief Zhou Xiaochuan urged developed countries
to restore their fiscal health as quickly as possible, saying in a statement
presented to the IMFC meeting that the primary risks to the global economy come
from developed countries.
''Sovereign debt risk has become a major and real threat to global financial
stability and economic recovery,'' he said.
The IMFC also said it will keep on working to phase in country-specific exits
from massive stimulus measures put in place to combat the recent global
economic downturn, the worst in generations.
On the IMF's governance, the IMFC said, ''We call for an acceleration of the
substantial work still needed on the full range'' of reforms.
With the changing face of global economic power, the IMFC is tasked with
revamping its quota system that determines each country's voting share.
U.S. Treasury Secretary Timothy Geithner said in a statement submitted to the
IMFC meeting that the United States has remained committed to ''modernize the
IMF's governance structure to reflect global economic realities.''
''We support a reduction in the size of the board that preserves the existing
number of emerging market and developing country chairs, including a move to
all-elected chairs,'' he said.
Currently, the IMF Executive Board has 24 seats.
Japanese Finance Minister Naoto Kan also supported the quota reform and
stressed the need to increase the IMF's capital to enable the institution to
play an effective role in aiding member countries ''both in terms of crisis
prevention and crisis response.''
Last September in Pittsburgh, G-20 leaders agreed to redistribute at least 5
percent and 3 percent of voting power in the IMF and the World Bank,
respectively, to developing countries to better reflect their growing economic
influence.
Brazil's Finance Minister Guido Mantega voiced disappointment with the ongoing
process over the IMF governance reforms, saying Brazil and other countries want
a shift in quota distribution at the IMF of 7 percent from advanced to emerging
countries. There was a ''lack of ambition in speed and substance,'' he said.
At their gathering in Washington on Friday, Group of 20 developed and emerging
heavyweight nations' financial leaders agreed to advance the date for a final
agreement on the issue of IMF governance reform to November from the original
deadline of January next year.
At a meeting of the IMF-World Bank Development Committee on Sunday, the World
Bank's quota reform is also expected to figure high on the agenda as the joint
panel committed at its previous talks held in October in Istanbul, Turkey that
it would strike a deal by the next meeting.
==Kyodo