Washington, 6 October 1998 (RFE/RL) -- The annual meetings of the International Monetary Fund (IMF) and the World Bank open in Washington today at a time when the world's attention is riveted on the state of the global economy.
U.S. President Bill Clinton will welcome the several thousand senior finance officials attending the meetings from nearly every nation on earth.
The chairman of the White House Council of Economic Advisors, Gene Sperling, says Clinton will deal less with immediate problems in his speech to focus on the longer term importance of an open financial and market system to raising prosperity and living standards everywhere.
He says Clinton will note how critical the difference has been between countries that have been able to muster the democratic support for reforms and have established strong new institutions to carry them out, and those that haven't.
Clinton has called for new lending facilities in both the IMF and World Bank to deal with some specific problems in well-run countries suffering from the contagion from Asia and Russia, and the need for social needs in countries hit by financial crisis.
But a U.S. call for additional lending is often answered now by other nation's asking when America will pay up its share of the IMF quota increase. The rise in the quota or membership of 45 percent was approved by the entire 182 member nations of the fund one year ago to keep the fund's capital base commensurate with the size of the global economy. But the U.S. House of Representatives has refused to approve the American share of $14.5 billion, claiming the IMF is responsible for the current financial crises.
Without the U.S. share, the quota increase cannot take effect.
IMF officials have said they still have money for countries like Brazil which are beginning to feel the contagion from Russia, but note that at a time of global crisis, the fund's reserves are getting very low.
The three days of formal meetings will be filled with speeches from a number of the finance ministers and central bank governors who serve as the governors for both institutions.
While they will certainly address the current financial difficulties of their countries, more focus is expected to be on the longer term needs of basic reforms in the global system.
That was the focus of the G-7 group of major industrial nation's finance officials who met in Washington on Saturday and of the IMF's Interim Committee meeting on Sunday.
While news reports talked of disputes and disagreements over how to reform the financial system, there was actually broad and strong general agreement on the steps that need to be taken.
A group of finance officials from 22 nations -- the G-7 plus 15 emerging market countries including Poland and Russia -- met under U.S. auspices last night in Washington to review the ideas of three working groups they appointed a year ago to study the system's needs.
The working groups issued a wide range of proposals, including promoting international standards in bank and financial market supervision, closer monitoring of fast-moving flows of private capital in and out of emerging market countries, and demanding greater transparency in both the public and private sectors.
The co-chair of one of the groups, Bank of England Deputy Governor Mervyn King, said transparency is a centerpiece of the recommendations but that openness will not prevent nor resolve crisis.
But it can help reduce the frequency of crises and reduce their severity by minimizing the "scale of surprises that hit the markets, and in some cases hit policy-makers themselves," he told a Washington press conference.
U.S. treasury undersecretary for international affairs, David Lipton, another co-chair, said the proposals are not recipes for solving today's problems, but for fixing the system longer term.
King agreed, saying it's important to remember that "today's short run is yesterday's long run and the failure in the past to address the long-run problems has led to more frequent and more severe short-run problems." Today's short run, he said, "is yesterday's long-run."