|
| |
|
| |
| Brown plan to reform global financial system meets opposition By Alan Beattie in Washington Financial Times; Apr 14, 2003  Two of the centralproposals from Gordon Brown, the UK chancellor of theexchequer, to reform the international financial system have run into opposition. Mr Brown, who has sought to play a leading role in the international finance and development debate and chairs the IMF's ministerial steering committee, had called for radical change of the International Monetary Fund, splitting off its surveillance of member economies from its lending decisions. He had also proposed an "international financing facility" (IFF) to borrow up to $50bn (£32bn, €46.5bn) from the global capital markets to fund development aid. The surveillance proposal - first made in an FT interview in 2001 and repeated by Ed Balls, Mr Brown's chief economic adviser, in a speech in Washington last month - was intended to encourage IMF staff to be more honest about the shortcomings of member countries, especially those borrowing from the IMF. But it has been opposed by several of the IMF's other large shareholder countries, which say staff have ample chance to be critical in their assessments. The US and large European countries have opposed the proposal in discussions within the IMF. A summary of the IMF's governing board discussion about surveillance, released last week, showed a majority of directors in favour of retaining current arrangements. Horst Köhler, IMF managing director, last week told the FT: "It can improve [matters] to have a more independent staff culture in the business of surveillance and crisis prevention. But you don't need, particularly, a new organisational scheme." A majority of the IMF's board, including the UK, recently voted to roll over Argentina's IMF debts despite a staff report criticising Argentine economic management. "If you read this report there is no lack of candidness or independence," Mr Köhler said. "The main problem is in the hypocrisy of the political process." Ian Campbell, the Australian treasurer, said this weekend: "If the fund is to be effective, it should strive to be a trusted insider in members' policymaking processes rather than an independent commentator." Meanwhile, Mr Brown's IFF proposal, which would involve rich governments underwriting borrowing in private capital markets, has received a welcome in principle from some countries, including France, and from Mr Köhler. But others, including the US and Germany, fear the proposal is impractical, since it would bind the hands of future governments and mortgage future aid budgets to repay the borrowings. Mr Brown said on Saturday that the UK was seeking to iron out technical difficulties in the IFF and would present a fully fledged proposal at the next G7 meeting. On surveillance, a UK Treasury spokesman said: "We continue to discuss proposals to strengthen the fund's surveillance function." Another of the UK's favoured plans, the IMF's proposal for a judicial bankruptcy procedure for insolvent governments, has been shelved indefinitely after the US declined to support the mechanism. |
