Tame debt: Developing nations urge rich economies
Friday, 23 April 2010, 15:07 IST
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Tame debt: Developing nations urge rich economies
Washington: Calling on the advanced economies to get their fiscal house in order to sustain the global economic recovery, the G24 group of developing countries expressed their concerns saying that the big budget deficits could hamper efforts by rich countries to deal forcefully with the causes of the financial crisis and avoid future economic shocks, reports Reuters. According to the G24 nations, advanced countries should "maintain policies to support the economic recovery while building confidence in the sustainability of their public finances by announcing credible consolidation plans." The group includes countries - Argentina, Brazil, South Africa, India, Iran, Syria, Nigeria, Mexico, Pakistan and Egypt. It meets on the sidelines of the IMF and World Bank meetings twice a year. China is an observer. However, the less developed economies have managed to emerge much stronger from the fallout of the economic downturn, returning to growth rates several times those of major economies which are still struggling to bed down recovery. Also, the group said that any delays in reforms to prevent future banking crises could put the recovery in danger and urged "vigorous implementation of the reform agenda." In the light of the financial crisis, the G24 said the IMF needs to strengthen its monitoring of the global economy, including of "systematically" important advanced economies. It said IMF financing should be seen as complementing, not substituting, the reserve stockpiles of countries "which remains an important element of self insurance against potential shocks." The IMF has proposed a significant increase in its resources, possibly up to $1 trillion, to bolster its role as an international lender of last resort to reduce the incentive for countries to accumulate large currency reserves. The G24 communique said the IMF and World Bank had taken steps to reform themselves, but more changes were needed. It called for an "ambitious" realignment of voting power in the institutions to give emerging and developing economies greater influence.

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