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IMF declares 2006 as year of economic reforms

The IMF said this in the light of looming dangers to global growth such as the high price of oil and protectionist policies.

india Updated: Apr 23, 2006 11:43 IST

The International Monetary Fund's (IMF) governing body said 2006 should be a year of economic reforms, in light of looming dangers to global growth such as the high price of oil and protectionist policies.

"While we are seeing strong expansion in the global economy, this is a time of profound change as a result of globalisation, and it is also a time of risk, especially from high and volatile oil prices and the dangers of protectionism," said Gordon Brown, chairman of the IMF's International Monetary and Financial Committee (IMFC) on Saturday.

In a statement, the IMFC said that major risks to global economic growth, such as the high price of oil, protectionism, the possibility of a bird-flu pandemic, or an abrupt shift in global financial market conditions, "have yet to be comprehensively addressed".

The IMFC called on the US to increase its national savings rate, on Europe and Japan to undertake structural reforms that would boost growth, and on some emerging economies to allow greater exchange rate flexibility.

"Given economic inter-linkages, all countries and regions will have a role to play by increasing the flexibility of their economies and adapting to changing global demand patterns," the IMFC said.

The committee said that the IMF should take steps to become more engaged in multilateral surveillance of economies. This would make it possible to identify potential problems sooner and prevent crises Brown said.

The committee said that the IMF's "effectiveness and credibility as a cooperative institution must be safeguarded and its governance further enhanced, emphasising the importance of fair representation for all members."

Some developing countries have called for additional representation.

"We underscore the role an ad hoc increase in quotas would play in improving the distribution of quotas to reflect important changes in the weight and role of countries in the world economy," the IMFC said, calling on IMF Managing Director Rodrigo de Rato to come up with a new quota system by September.