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Posted by Monitor on March 11, 2010, 9:43 pm
IMF chief says world must prepare for next crisis
The world needs to prepare for the next economic crisis, even as it
begins to recover from the worst recession since the Great Depression,
the head of the International Monetary Fund said Tuesday.
IMF Managing Director Dominique Strauss-Kahn, speaking to business
students at a Johannesburg university, expressed concern that recovery
could mean leaders will feel less pressure to work together and pursue
such reforms as tightening regulation and supervision of financial
markets.
=93The consensus is stronger when you=92re afraid,=94 he said.
=93Certainly this consensus is not as strong as it was six months ago,=94
Strauss-Kahn said.
The former French finance minister said he could not predict the
timing or the nature, but =93don=92t fool ourselves, there will be future
crises.=94
In its most recent World Economic Outlook, the IMF predicted output
would grow by 3.1 percent in 2010. But it also cautioned that
unemployment would continue to grow.
=93I won=92t say that the crisis is over. I would say we are probably in
the second part of the crisis,=94 he said.
Economic stimulus packages adopted around the world, including in
South Africa, helped avert a greater crisis, Strauss-Kahn said. While
the initial intervention focused on growth, =932010 must be the year
where economic policy focuses on job creation,=94 he said, particularly
in the small business sector.
On the financial markets, he said a global approach must be found for
regulation, and supervision must be strengthened. He said central
bankers, international accounting organizations and others were in a
better position than the IMF to formulate regulations, but that his
agency would play an important role in ensuring that once new rules
were adopted, they were followed.
After the crisis, politicians will be under pressure to come up with
new rules quickly, Strauss-Kahn. But he said it would take time to
devise rules that will help instead of hurt, and then time to put them
in place properly.
Strauss-Kahn is on an African tour that started in Kenya and will take
him to Zambia from South Africa. The continent was hard hit by the
downturn that began in the West, because it dried up foreign
investment, aid and markets for its raw materials such as oil and
gold, and affected the amount Africans working abroad were able to
send to impoverished families at home.
Early in the crisis, there had been fears Africa would be slow to
recover, but Strauss-Kahn said the continent appeared to be keeping
pace with the global rebound.
=93One really amazing fact of this crisis is that Africa behaved much
better than expected,=94 he said.
A decade of strong growth before the crisis meant African governments
had the cash to implement their own stimulus packages.
South Africa, which has the continent=92s strongest and most diverse
economy, lost 900,000 jobs last year on top of already high
unemployment.
=93But the situation could have been much worse,=94 Strauss-Kahn said. =93I=
n
South Africa, the right policies have been implemented timely and
strongly enough.=94
Source: http://www.InterMoney.org
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