SUNS  4299 Monday 12 October 1998


FINANCE: WORLD BANK/IMF MEET BIG BOX OFFICE

Washington, Oct 8 (IPS/Abid Aslam) -- Michel Camdessus, jocular head of the International Monetary Fund (IMF), likened the agency's annual meeting here to a film festival. Reviews were decidedly mixed.
"You wanted to see 'Titanic' or 'Chronicle of a Death Foretold', and you ended up seeing 'The Great Escape' or 'Great Expectations'," IMF Managing Director Michel Camdessus joked with reporters Thursday.

The annual Fund/Bank meetings offered no dramatic breakthrough in dealing with an economic crisis that has ravaged Asia and Russia, menaced Latin America, and begun to claim victims in the
industrialised world.

Camdessus and World Bank President James Wolfensohn nevertheless argued that progress was being made despite gloomy speeches by delegates, sceptical media coverage, and bearish markets.

The Fund chief announced imminent agreement with Brazil on an international support package and Wolfensohn highlighted the introduction, Oct. 1, of South Korea's first benefits scheme for
unemployed workers.

Adoption of a $30 billion, IMF-led package for Brazil and the hoisting of Bank-backed social safety nets in Korea would put two regional giants on the dole, at least symbolically, and could be
regarded either with dismay or relief. The Bank and Fund leaders, however, sought to accentuate the positive.

Camdessus said the Brazil deal, expected in the next few weeks, would demonstrate the Fund's ability to "react promptly" in concert with the international community. Wolfensohn was more emphatic with regard to Korea.

"There was never a social safety net in Korea until the first of October, but now it's in," Wolfensohn said. "It is this form of social support which doesn't make the headlines but which is clearly fundamental to a renewal process." International efforts to deal with the worst economic turmoil in half a century also were making headway, according to Camdessus. "We are seeking consensus
and agreeing, forcefully, on what is our basic approach," he said.

"The five elements of the new architecture are defined and endorsed," Camdessus told delegates Thursday. These included transparency, sound financial systems, involvement of the private
sector, "orderly' investment liberalisation, and international standards of accounting and financial practice.

Camdessus described "an extraordinary sense of cohesion" among member states, and "unanimity" in support of his action plan, based on the current orthodoxy and outlined even before the meetings
began. But some remained unconvinced.

"The brute fact is that after five days of intense discussions and debate we are still at a loss as to why contagion has continued to spread," said Yashwant Sinha, India's finance minister. Speakers
from a number of other countries questioned elements of the proposals, including the opening of capital markets and imposition of uniform banking and accounting codes.

While delegates from the developing world voiced dissatisfaction with a crisis management and global reform process dominated by the West, European officials aired grievances against US efforts to dominate.

President Bill Clinton proposed a special fund to disburse preventive and emergency loans and touted long-term reform proposals made by a 'Group of 22' industrial and emerging market
economies convened by Washington.

But Europeans responded coolly to his ideas and argued that the United States should pay up its IMF contributions, stalled in Congress, before seeking to set the agenda.

Camdessus predicted that the US funds - $3.5 billion for an emergency funding mechanism and $14.5 billion for an expansion in IMF capital - soon would be forthcoming. This would be key to any
consideration of Clinton's ideas because "when we speak of new facilities we must also speak of new funding."

If the IMF chief sometimes seemed under siege from shareholders, he could have just as much trouble with market players. To the extent that any ideas were popular among officials, these included the need to ensure that private investors take losses from bad business decisions, help meet the costs of bailouts, and accept a greater degree of government oversight.

That is hardly music to investors' ears.

Before the meetings, a leading international association of private finance companies rejected attempts to increase regulation. During the past week investment bankers, whom Wolfensohn said were "hustling for business" at lavish parties during the meetings, complained that turmoil in world markets had hit them hard.

Several U.S. investment sources said their firms faced lay-offs, especially in emerging markets departments. With jobs at risk, private sector players have intensified their complaints that the
IMF mishandled the crisis and contributed to panic in world stocks.

One specialist in institutional investment asked Camdessus pointedly whether the IMF chief would resign. "I can reassure you, certainly the time will come when I will step down," Camdessus
retorted. No serious analyst predicted his imminent departure.

Progress in righting the global economy will be reviewed when the agencies' policy-making committees meet here in April. Between now and then, said Camdessus, "it will be 'The Longest Day'."

The reference seemed particularly fitting: The epic film about D-day ended on a triumphal note, the Allied beachhead established and Nazi forces in retreat. Victory would follow - but the immediate task at hand would be to bury the countless thousands of dead.