- The Washington Times - Monday, September 30, 2002

World financial leaders pledged yesterday to do everything in their power to prevent plunging stock markets from dragging down the global economic recovery.
They committed themselves to meeting an April deadline for a concrete proposal to set up a bankruptcy system for countries with unsustainable debt burdens. The plan was the major achievement of the annual meetings of the 184-nation International Monetary Fund and World Bank.
Protesters had sought to disrupt the discussions by shutting down Washington. Their efforts fizzled in the face of poor turnout and an overwhelming police presence.
Police prepared for as many as 20,000 demonstrators, but crowds numbered only a few thousand mostly peaceful protesters who used puppets and banners to display their unhappiness with global capitalism.
IMF Managing Director Horst Koehler and World Bank President James Wolfensohn said the protesters failed to appreciate the extensive reforms the two institutions had undertaken to respond to the needs of poor countries.
But both officials acknowledged that more needed to be done to narrow the gap between rich and poor nations; 15 percent of the world's population controls 80 percent of the income.
"The quest for a more equal world is the quest for long-term peace something that military power alone can never achieve," Mr. Wolfensohn told delegates yesterday.
Finance officials said the sluggish economy is making harder their job of promoting prosperity. The stock market declines, economic turmoil in Latin America and anxiety about a war in Iraq have contributed to the weaker-than-expected recovery.
Argentina was forced into a record default on government debt in December. Brazil's currency fell to record lows in the past week as investors feared Latin America's largest economy would default on its debt despite a record $30 billion loan approved by the IMF early this month.
Finance officials said the United States, Europe and Japan had committed during the weekend meetings to address problems in their countries that were holding back growth.
Treasury Secretary Paul H. O'Neill said Washington was doing its part to promote a global recovery. He said he expected the world's largest economy would return to solid growth of 3 percent to 3.5 percent "over the course of the coming year."
Protesters said the IMF and World Bank's commitments to helping poor countries were inadequate. But officials of the two institutions said they were on track to achieve their part of the U.N. goal of cutting in half by 2015 the number of people in poverty.
Both Mr. Koehler and Mr. Wolfensohn urged rich nations to make their markets more open to farm goods and other products from poor nations.
On Saturday, the IMF's policy-making panel of 24 finance ministers directed the agency to develop a concrete bankruptcy plan in time for the committee's April 12 meeting.
The idea of allowing countries with unsustainable debt burdens to declare bankruptcy has generated stiff opposition from international banks, which want to be repaid in full for the billions of dollars they have loaned developing countries.
Brazilian Finance Minister Pedro Malan said he was not sure an entirely new way to deal with defaults was needed. In recent years, he said, Russia, Ukraine, Pakistan and Ecuador were able to force restructuring of their debt burdens.
But British Chancellor of the Exchequer Gordon Brown said that over the past five years, stretching from the 1997-98 Asian financial crisis to Argentina's default, a consensus was emerging that the current ad hoc process was not working.
"There is a far greater understanding now that this has got to be done," Mr. Brown said.

Copyright © 2018 The Washington Times, LLC. Click here for reprint permission.

The Washington Times Comment Policy

The Washington Times welcomes your comments on Spot.im, our third-party provider. Please read our Comment Policy before commenting.


Click to Read More and View Comments

Click to Hide