World economic chiefs struggle for unified message

World economic chiefs struggled to find a unified message as they wrapped up meetings here on Monday on a global economy that is still growi...

World economic chiefs struggled to find a unified message as they wrapped up meetings here on Monday on a global economy that is still growing but at risk from stock market turmoil, a feared war in Iraq and crises in Latin America. “Our most immediate concern must be to strengthen the global economy,” IMF managing director Horst Koehler told Finance Ministers and Central Bankers of the IMF and World Bank. “There are clearly a number of risks and uncertainties. But we should beware of undue pessimism. There are still good reasons to expect that the recovery will continue,” he said.

To ensure recovery the FMs and Central Bank governors called for:

* Japan to mop up the bad debts weighing on its banking system
* Europe to reform its labour markets
* US to clean up corporate boardrooms
* Plans for new bankruptcy-style system to deal with countries in debt crises, such as Argentina

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Outside the meetings, security was heavy during a weekend of protests, in which several thousand anti-globalization protesters howled about the failure of the institutions to help the world’s poor.

Inside, policymakers were befuddled about Japan’s plans to wipe off the bad loans strangling the banking system that have kept the world’s second-largest economy in a rut.

An unprecedented plan announced by the bank of Japan on September 18 to buy shares from commercial banks remains a puzzle, some leaders said. “I did not come away with an understanding of how these particular interventions are going to contribute to the change” in economic growth, US treasury secretary Paul O’Neill said. From the US perspective, O’Neill said the US economy was strengthening but that the world needs a bottom-up movement to spark growth, with a limited role for international institutions.

Hans Hoogervorst, the Netherlands’ FM, said the rest of the world should reduce its dependence on US economy, but that US and other advanced countries need to clean up corporate malfeasance that is eroding confidence.