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IMF urges quick action to safeguard global economy

Sunday, October 14, 2012 | 3:55 PM    

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TOKYO, Japan (AP) – Global financial ministers called Saturday for quick and effective action to safeguard faltering economic growth and rebuild shaken confidence as they ended an annual meeting of the International Monetary Fund (IMF).

"Global growth has decelerated and substantial uncertainties and downside risks remain," an IMF advisory committee said in a communique. It exhorted advanced economies to carry through with needed structural reforms and "credible fiscal plans."

Decisive action is needed to "break negative feedback loops and restore the global economy to a path of strong, sustainable and balanced growth," it said.

It also urged emerging economies to adapt their own policies to help counter slowing growth in Europe and the United States.

The annual meeting of the IMF and World Bank, convened in Tokyo this year, has highlighted frustrations among many countries over drag on growth from the lingering debt crisis in Europe, plus alarm over a possible blow to the world's largest economy if the US fails to resolve an impasse over its budget deficit.

"A durable solution to the Euro area crisis would provide a much-needed boost to global recovery," Yi Gang, deputy governor of China's central bank told fellow financial leaders at the meeting Saturday of the IMF's International Monetary and Financial Committee (IMFC).

Yi said uncertainty over government debts in the U.S. and Japan was slowing recovery and causing "costly spill-over effects to the rest of the world."

Slower growth elsewhere is sapping the potential in the poorest countries, many of which depend on exports of minerals, oil and other commodities to the industrial countries.

"We should all be committed in our resolve to avoid a worst case scenario where strains in the euro area deepen, fiscal cliff and debt ceiling problems in the US are not resolved, and growth in emerging market economies continues to decline," said Pravin J Gordhan, South Africa's finance minister.

While most of the attention during the meeting was focused on the crises facing the biggest economies, the IMF and World Bank - whose mission is to fight poverty - have also emphasised the need to help protect the poor from the spill-over of slowdowns in richer nations.

The IMF announced it would devote US$1.1 billion in funds from windfall sales of gold to help fortify funds for low-cost loans for low-income countries.

Overall, the IMF and its member countries have made progress in shoring up the international financial system, said Tharman Shanmagaratnam, chairman of the IMFC.

"All agreed we are in a better position today than we were six months today, a better position with regard to the policy footing for getting growth restarted and for achieving fiscal consolidation in advanced economies," he said.

At Saturday's meeting of the IMFC, which advises the IMF and monitors the world financial system, officials from developing and emerging economies urged the US and European nations to prevent malaise in their regions from slowing global growth.

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