IMF to work with Asia on global economic crisis

ISLAMABAD: The International Monetary Fund (IMF) is looking to work more closely with Asia to lessen the impact of the global crisis on the region and to help promote sounder and stronger growth globally.

According to IMF press statement received here on Monday, this was stated by David Lipton, IMF First Deputy Managing Director while addressing participants at Asian Financial Forum in Hong Kong.

Asia's economies are getting stronger showing great promise, in part because of the reforms introduced courageously and not without painful consequences, when Asia faced its own crisis in the 90s, David said.

But now with problems in rest of the world, particularly in Europe that pose a risk to Asian prosperity, he said, adding, now Asia has a stake in seeing Europe solving its problems and even in playing a role in that process.

"Beyond that, Asia has its own challenges, both in the near and longer term," Lipton warned, but "by working together, more and better than in the past, Asia and the IMF can help ensure stability and prosperity for the region and for the world," he added.

Reflecting on the global outlook, Mr. Lipton observed that "at the global level, the pace of economic activity is weakening, and the risks for Europe and the world are high."

But, he stressed, "rather than allow ourselves to be paralyzed by pessimism, it is time to focus on the more hopeful perspective of working our way through this crisis. If there is good news, it is that we know what policies are needed, and we are busy trying to muster up finance to support those policies."

Without bold action however, "Europe could be swept into a downward spiral of collapsing confidence, stagnant growth and fewer jobs, he said.

He said Asia emerged from the 2008 financial crisis with its global standing strengthened and called upon Asian policy makers to stay the course with fiscal normalization.

"As Asia goes forward, the IMF stands ready to be a partner," Lipton said, adding that "the IMF learned important lessons from Asia's experience that we are now applying to programs across the globe, including in Europe."

Two areas he singled out where the IMF's work can support the region's interests are enhancing economic and financial surveillance for crisis prevention, and strengthening the global financial safety net-including sharper surveillance of economic spillovers and macrofinancial linkages, but also new lending tools, such as the precautionary credit line, specifically tailored for crisis by- standers.

Efforts are also underway to better integrate IMF resources with regional reserve pooling arrangements like the Chiang Mai Initiative and enhance cooperation with them.

While all eyes are on Europe right now, "by working more and better together, Asia and the Fund can help bring about sustained economic growth, for the region and for the world," Lipton added.

Copyright Reuters, 2012