IMF asks domestic policymakers to be nimble to external risks

Chandi Dharmaratne

Singapore September 15, 2006 (LBO) – The International Monetary Fund Friday asked domestic policymakers to be nimble and adapt to external risks like inflation and high oil prices that is threatening to disrupt global economic growth.

The Washington based global financial watchdog and biggest financial backer, is also keen to boost its surveillance role of the world economy, but warned there is no ‘magic bullet’ to ease global imbalances.

“The outlook for the global economy remains strong…but there are also risks to this generally good outlook; inflation risks are a concern as output gaps narrow, high oil prices could adversely affect both inflation and growth,” IMF managing director Rodrigo Rato said Friday.

Citing the setbacks in the Doha Round of trade talks, Rato warned the ‘risks of a disorderly adjustment of global economic imbalances has not gone away.’

“So policymakers need to be ready to adapt to a more difficult environment,” he told reporters here.

The 184-member IMF, holds its annual meetings in Singapore next week, where participants will discuss ways on how the Fund should reshape itself for the future.

Among the hot topics are a preliminary overhaul of its voting system or ‘quotas’