IMF raises fresh concerns over global economic crunch


FRIDAY, 25 JUNE 2010 00:00 FROM , ABUJA


The International Monetary Fund (IMF) has warned countries that are not directly affected by the impacts of the global economic crunch to put guides in place to ensure preparedness for possible emergence.


The Managing Director of IMF, Dominique Strauss-Kahn, who stated this in Vancouver, Canada, at a parley with International Trade Union Confederation (ITUC) Congress, spoke of the positive impact of economic stimulus policies to prevent an even deeper recession and stated that countries not beset by deep financial problems should maintain planned fiscal stimulus this year, given that the recovery has been very uneven.However, he stated that some countries that couldn’t finance additional debt were obliged to begin reducing their fiscal deficits now.


Even if trade unions and the IMF did not agree on the economic strategy governments should adopt, Strauss-Kahn stated that the IMF appreciated unions’ proposals made on behalf of working people and that the Fund had made efforts to ensure social safety nets were maintained to protect the most vulnerable and agreed with the need for more progressive taxation.He also announced that the IMF and the ILO would hold a joint conference next September in Oslo on the theme of employment creation.


Strauss-Kahn also spoke of the global trade union movement’s support for a Financial Transactions Tax (FTT). Noting that the IMF had expressed its preference for a different kind of financial activities tax based on profit and compensation, he agreed with the ITUC that a substantial contribution from the financial sector is justified to pay for the cost of the crisis and to dampen overly risky behaviour in the financial sector.


He stated that the specific choice between the FTT and another type of tax is “a technical discussion” that needed to take place.The ITUC therefore called for stronger regulations of the financial sector.At the parley, the state of the world economy and the global employment crisis continued to be heavily debated. Leaders of some important internal organisations were invited to take part in this debate. First out was Helen Clark, Administrator of the United Nations Development Programme (UNDP). Former New Zealand Prime Minister, Helen Clark, became the first woman to lead the UNDP in April 2009.


Clark echoed the concern expressed by many Congress delegates that the momentum for substantial financial regulatory reform seemed to have weakened and that the plans of some countries to exit rapidly from fiscal stimulus policies “has significant implications for employment growth.”Furthermore, Clark added: “It cannot be assumed that job creation will flow automatically from a resumption of growth. Often employment figures are the last indicators to move when growth recovers.”


She put forward the ILO’s Global Jobs Pact as the path countries should follow to restore employment levels and support decent work.Pascal Lamy, Director General of the World Trade Organization (WTO), agreed with trade unions’ advocacy of stronger regulation on the financial sector, which had caused the global crisis, and observed that the global trade union movement had played a valuable role in pushing for greater coherence among international institutions.


He invited trade unions to play an even stronger role in favour of regulation and coherence in the future, both on the national and international level.The Deputy-Director-General of International Labour Organisation (ILO), Kari Tapiola said in recent months, employment has received less attention than fiscal considerations in some countries, adding, “from our point of view, there is no recovery until there is a recovery of employment.”





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