Summit Deepens imf Coordination Role,official Says

The Venice summit accord gives the International Monetary Fund (IMF) increased responsibility in smoothing vital economic cooperation between industrial countries, a senior IMF official said.

The official, who met reporters but asked not to be identified, made clear that the use of a series of economic measurements to monitor the seven leading industrial democracies would be difficult but was a major step in cooperation.

The United States, Japan, West Germany, France, Britain, Italy and Canada agreed at the summit to use a series of economic indicators to forecast economic behaviour in an attempt to increase cooperation on economic policy.

The setting of a formal process of review, while seen as a step forward in the cooperative effort, was also criticised because it lacked teeth to force a country to change economic behaviour that hurt other countries.

But the official said influences and peer pressure could have a major impact in reforming an erring country.

Economists generally believe a cooperative economic approach by the largest countries will have a salutory impact on the global economy, including helping the poorest debtor countries.

The official said the IMF function would be to warn countries when their economic behaviour was straying badly and try to persuade them to modify it. “I hope it will be a yellow light, not a red flag,” he said.

He also said he hoped negotiations would begin in the next few weeks to increase the IMF’s structural adjustment facility, which helps 62 of the world’s poorest countries.

The facility, approved about 15 months ago, is currently financed at about 3.8 billion dlrs, but this would be tripled under the plan.

He said reaching an accord on the agreement would be very difficult, with countries pressing each other to do more and finding reasons to reduce their own exposure. “They will be tremendously difficult negotiations,” he said.