'IMF, WB should be reformed to reflect contemporary realities'

Ajay Kaul

Tehran, Nov 1 (PTI) Citing the global economic crisis,
India today said the approach of international financial
institutions like International Monetary Fund (I.M.F.) and
World Bank was no more relevant and these bodies should be
reformed to reflect the "contemporary realities".

Addressing the India-Iran Joint Business Council
meeting here, External Affairs Minister Pranab Muikherjee said
the financial crisis that has gripped the world threatens to
be worse than that witnessed in the 1930s.

"We are meeting at a time when there is crisis
worldover in the financial sector," he told the gathering of
senior executives of top business establishments of the two
countries here.

Noting that the crisis had particularly hit the
banking sector and stock markets, Mukherjee said if remedies
had to found in real terms, there should be relook at the
international financial and economic structures.

He pointed out that the U.N. financial bodies like the
International Monetary Fund and World Bank had been
established in 1945 in the post-World War II era to provide
help in reconstruction activities across the globe.

Their approaches have "lost their relevance in the
contemporary situation", the External Affairs Minister said
and stressed these should be reformed so that they are in
"tune with today's realities".

Iranian Economic and Finance Minister Shamseddin
Hossain, while referring to the financial crisis, said Iran
and India had been left untouched by the meltdown because of
their correct policies.

He underlined the need for closer cooperation between
the two countries to meet the situation and ensure their
economic stability.

Contending that the world economic outlook was "not
promising", Hossain said one of the approaches to improve the
situation was fair distribution of benefits and gains among
other countries by the developed world.

"In this condition, stability and firm fundamentals of
Iranian and Indian economies and their considerable resistance
to the crisis is an opportunity that should be considered," he
said.

The Iranian Minister said the financial crisis was a
result of "malfunctions and deficiency" of the regulatory and
supervisory measures in the developed countries' financial
markets, non-efficiency of the risk management of the private
financial institutions and non-effectiveness of the
disciplinary mechanisms of the market-oriented economies.

"The current international economic order causes all
countries to take effect from different global challenges
proportional to the extent of their integrity in the world
economic system," Hossain said.

"Thus the regional convergence and cooperation and
forming regional economies are considered as important
strategies to enable the countries to exchange their economic
and development experiences," the Iranian minister said.

"More instability of the global economy is predicted"
as despite all measures taken, along with introducing economic
relief packages amounting to billions of dollars, "significant
improvement is not expected in the near future," he said.

He said this was an important challenge which will
impose heavy pressure on some countries and the global
economy.

"Although the current situation is no satisfactory, we
should not ignore that one of the reasons for this turmoil is
the financial, economic and trade concentration in a limited
number of development and industrial countries which has
caused the risk increase and vulnerability of the world
economy," he added. PTI AKK