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Washington - International Monetary Fund (IMF) member countries sought to bridge sharp differences over the global economy, acknowledging that rising inflation in emerging markets poses a risk to rich countries too.
Addressing one of their biggest challenges, the 187 IMF nations on Saturday recognised the alarm among developing countries about huge inflows of speculative cash that are stoking their growth but also their inflation rates.
"When inflation goes up in emerging markets, it's not just an emerging market problem, it's a global inflation and possibly interest rate problem," said Singapore Finance Minister Tharman Shanmugaratnam, who chairs the IMF's steering committee.
Top finance officials, in Washington for a twice-yearly meeting of the IMF, argued over the dangers posed by high government debt and super-low interest rates in sluggish, rich countries and the risk of overheating in developing economies.
"It's one of the most difficult policy moments, one of the most complex challenges I've ever seen, certainly in my lifetime," Angel Gurria, head of the Organisation for Economic Cooperation and Development, told Reuters.
The increased focus on the pitfalls in the policies of wealthy nations is part of a shift at the IMF to be more attentive to increasingly influential emerging powers.
Countries such as Brazil have struggled to cope with waves of yield-chasing "hot money" which pushes up inflation.
World Bank President Robert Zoellick called rising food prices "the biggest threat to the world's poor."
The World Bank estimates another 10% rise in the food price index could add 10 million more people to the 44 million already thrust into poverty over the last year.
"We risk losing a generation," Zoellick said.
Aware of stiff opposition in some emerging countries to any limits on how they manage the inflows that drive up prices, IMF members said the policies that lead investors to chase higher returns in other emerging economies also need oversight.
Tharman said inflation in the developing world, if unchecked, could spread to rich economies already shouldering large deficits. That would push up borrowing costs and threaten the recovery from the worst global recession in decades.
"We have learned from painful experience in the last few years that nothing is isolated and that risk in one region.... rapidly gets transmitted to the rest of the world," he said.
The IMF committee said the global economy was strengthening but that policy action was needed given "significant risks."
It also sought proposals to strengthen IMF surveillance of "countries that pose the largest systemic risks."
The Group of 20 (G20) developed and emerging economies on Friday delayed a decision on contentious guidelines for when countries may use capital controls.
French Finance Minister Christine Lagarde said "it seems vital to have a common set of rules."
France chairs the G20 this year and is seeking a deal on capital controls in time for a G20 leaders summit in November.
The G20 did agree on Friday to a plan that could put more pressure on the United States to fix its deficits as well as push other leading economies, including China, to address their own shortcomings.
Gurria said "sometime in the fall or this time next year, maybe inflation will have a higher profile" in G20 talks.
Addressing one of their biggest challenges, the 187 IMF nations on Saturday recognised the alarm among developing countries about huge inflows of speculative cash that are stoking their growth but also their inflation rates.
"When inflation goes up in emerging markets, it's not just an emerging market problem, it's a global inflation and possibly interest rate problem," said Singapore Finance Minister Tharman Shanmugaratnam, who chairs the IMF's steering committee.
Top finance officials, in Washington for a twice-yearly meeting of the IMF, argued over the dangers posed by high government debt and super-low interest rates in sluggish, rich countries and the risk of overheating in developing economies.
"It's one of the most difficult policy moments, one of the most complex challenges I've ever seen, certainly in my lifetime," Angel Gurria, head of the Organisation for Economic Cooperation and Development, told Reuters.
The increased focus on the pitfalls in the policies of wealthy nations is part of a shift at the IMF to be more attentive to increasingly influential emerging powers.
Countries such as Brazil have struggled to cope with waves of yield-chasing "hot money" which pushes up inflation.
World Bank President Robert Zoellick called rising food prices "the biggest threat to the world's poor."
The World Bank estimates another 10% rise in the food price index could add 10 million more people to the 44 million already thrust into poverty over the last year.
"We risk losing a generation," Zoellick said.
Aware of stiff opposition in some emerging countries to any limits on how they manage the inflows that drive up prices, IMF members said the policies that lead investors to chase higher returns in other emerging economies also need oversight.
Tharman said inflation in the developing world, if unchecked, could spread to rich economies already shouldering large deficits. That would push up borrowing costs and threaten the recovery from the worst global recession in decades.
"We have learned from painful experience in the last few years that nothing is isolated and that risk in one region.... rapidly gets transmitted to the rest of the world," he said.
The IMF committee said the global economy was strengthening but that policy action was needed given "significant risks."
It also sought proposals to strengthen IMF surveillance of "countries that pose the largest systemic risks."
The Group of 20 (G20) developed and emerging economies on Friday delayed a decision on contentious guidelines for when countries may use capital controls.
French Finance Minister Christine Lagarde said "it seems vital to have a common set of rules."
France chairs the G20 this year and is seeking a deal on capital controls in time for a G20 leaders summit in November.
The G20 did agree on Friday to a plan that could put more pressure on the United States to fix its deficits as well as push other leading economies, including China, to address their own shortcomings.
Gurria said "sometime in the fall or this time next year, maybe inflation will have a higher profile" in G20 talks.
