Latin America's debt, Middle East's languor worry IMF

A fast-rising mountain of public debt in Latin America and Asia and extremely weak economic growth in the Middle East are problems that threaten future global growth and political stability, the International Monetary Fund (IMF) said.

The IMF on Thursday high-lighted a number of global economic threats in a series of new reports that will set the agenda for next week's annual meetings of the 184-nation IMF and its sister lending organization, the World Bank, in Dubai, United Arab Emirates.

Those meetings are expected to focus on efforts to help Argentina, which was forced into a record debt default in 2001, to emerge from the worst economic crisis in its history as well as discussions on how to boost global growth.

US Secretaryof the Treasury John Snow said that his goal during the IMF meetings would be to stress the need for other countries to follow the lead of the US, which has enacted a third round of tax cuts, by taking aggressive steps to bolster growth.

"During my talks, I will report that as a result of President Bush's leadership, the US economy is returning to higher levels of growth, but that the global economy requires Europe and Asia to attain higher levels of growth as well," Snow said in a statement Thursday.

"The number one issue facing the global economy is the need for more engines of growth," Snow said.

The IMF and Argentina reached agreement late Wednesday on a new three-year loan deal which will supply the country with US$21 billion in loans from the IMF and other multilateral lending agencies aimed at bolstering growth and shoring up the nation's currency and battered banking system.

The IMF study noted the number of costly debt defaults or painful debt restructurings that various countries have been forced to endure in recent years including Argentina, Ecuador, Pakistan, Russia, Ukraine and Uruguay.

The report said that public debt has risen quite sharply in recent years and now stands at an average of 70 percent of a developing nation's GDP, up 15 percent from the level in 1997.

The IMF urged nations with exploding public debt burdens to trim unproductive governemnt spending and seek ways to broaden the tax base.

"The historic evidence suggests that there will be widespread problems over time if emerging markets do not take steps to reign in expenditures and broaden their revenue base," said IMF chief economist Kenneth Rogoff.