Washington, April 24:

The International Monetary Fund (IMF) is planning urgent talks between the world’s leading economic powers over the coming months after the organisation’s biggest shake-up in four decades gave it new powers to avert the threat of a global crisis.

The new role for the IMF heralds a drop in status for the G7 — the gathering of finance ministers and central bank governors from the US, Britain, Germany, Italy, France, Japan and Ca-nada. The emergence of China and India in recent years has made the G7 unrepresentative of the new global economy and unable to offer solutions to global imbalances.

Amid fears that this week will see further downward pressure on the dollar and higher oil prices, the IMF is to start curing imbalances in the global economy.

Member countries moved swiftly at the weekend after the fund warned that strong growth in the global economy could be abruptly halted if financial markets took fright at the disparity between America’s massive trade deficit and the surpluses built up by China and other exporting nations of Asia.

In its biggest structural change since the break-up of the Bretton Woods system of fixed exchange rates in the early 1970s, the fund was given a mandate to conduct multi-lateral surveillance of the global economy and to suggest steps that the leading nations should take in concert to ensure better-balanced growth. The surveillance unit will be modelled on the independent Bank of England, with guaranteed independence from political interference and an annual remit to look at the linkages and spillovers between monetary policy, fiscal policy, exchange rates and financial sector issues in key IMF member countries. Until now, the fund has only held bilateral discussions with individual member countries, but policy makers said they wanted the Washington-based institution to revert to its original role of ensuring global economic stability.

Rodrigo de Rato, the fund’s managing director, said, “It will be an important vehicle for analysis and consensus-building.” The British finance minister, Gordon Brown, who chairs the IMF’s key policy making committee, said.

“We resolved to make the IMF more fit for purpose in a global economy, and more able to address challenges that are quite different from when the IMF was created.”

IMF leans on China

WASHINGTON: Global finance chiefs wrapped up talks, calling for action against runaway oil prices as they pressed China to ease its currency regime and approved a far-reaching overhaul of IMF operations.

The gathering here of finance ministers and central bank governors in addition backed plans to meet a long-standing demand by emerging market countries for a greater stake in decision-making at the IMF. — AFP