Camdessus Sounds Global Recesseion Alert

International Monetary Fund (IMF) managing director Michel Camdessus admitted to mistakes, launched a "bold" introspection of the Fund's role in a new world order replete with unpredictable capital flows and sounded the recession alert for the world.

According to Camdessus, there is no time to lose as the world is still experiencing the aftershocks of the currency meltdown that had begun in Southeast Asia. "It would perhaps be too dramatic yet to talk of global recession, but the evidence of the risks calls for immediate action," he said.

While acknowledging the economic expansion in the US, Camdessus sounded a note of caution when he said, "Even North America and Europe are not immune, and the effects of the crisis are beginning to be felt."

Addressing the board of governors of the Fund on the first day of the annual meetings, Camdessus said, "Governors, you have come this year in the midst of a crisis. A crisis that has already cost hundreds of billions of dollars, millions of jobs, and the unquantifiable tragedy of lost opportunities and lost hope for so many people, particularly among the poorest. This is time then, for hard thinking, for recognising errors, and for bold steps."

Camdessus also launched an attack on national regulators, who, he believed, through poor regulation had created a problem. According to him, there was lack of transparency and poor monitoring of hedge funds and of transactions in many off-shore centres

Stating that the institutions should be adapted to the new world order, Camdessus said, "this applies to the IMF itself. It has been said that you should not reform the fire brigade while the fire is raging. Well, I believe that at least we must start."

Camdessus's blueprint for change at the Fund entails:

* The Fund and its functioning would be more transparent. Surveillance activity is already under review;

* Legal instruments need to be reappraised.

* Accept the French proposal and transform the interim committee into a council with decision making, rather than consultative, powers. Especially, because the Fund was being repeatedly questioned when the impact of its programmes went beyond the economic sphere;

* Review the modalities of the Fund's multilateral surveillance.