In a sweeping show of unity, the world's richest nations on Saturday promised to cut interest rates further if needed to bolster a bleak world economy as an anti-globalization protest withered in the cold.
With the IMF taking center stage on the second day of international financial meetings in Ottawa, Canada, police made 32 arrests as about 4,000 protesters, some of them burning the US flag, rallied against the guardians of globalization and the bombing in Afghanistan.
PHOTO: REUTERS
Inside barricades erected to protect the meetings from the protesters, finance ministers and central bankers from around the world met to chart the actions the IMF would take in the months ahead to try and counter an increasingly dour and uncertain global economic outlook.
The IMF's International Monetary and Financial Committee said in its communique that rich nations must take the lead in boosting growth -- and that those countries stood ready to do so with even lower interest rates if needed.
"All monetary authorities said they stand ready to take further action if necessary," Gordon Brown, British Chancellor of the Exchequer and IMFC chairman told a news briefing.
But on the hotly-debated topic of whether the IMF should take a leading role in the fight against funding terrorism, the lender's policy-setting committee opted against expanding its mandate to become a global financial policeman.
The communique reiterated that the IMF expects the world economy will start to recover by the second half of next year.
"The advanced economies have a key responsibility to promote early recovery in global growth," the IMFC's communique said. "The recent easing of monetary policy in the United States, the euro area, and other advanced economies is welcome, and the authorities stand ready to take further action if appropriate."
The IMFC is the fund's policy-setting committee, with representatives from across the spectrum of the IMF's 183 members. It meets twice a year to set the lender's agenda.
Financial leaders also talked about the rebuilding of Afghanistan once the war there ends while Argentine officials worked frantically to build support for a debt swap they plan to start on Monday.
A heavy police presence, a modest turnout and cold weather combined to keep protests fairly subdued although one skirmish saw police use tear gas to control the crowd and another plastic bullets. Mid-afternoon, police hosed the crowd with water, very uncomfortable for protesters in the cold air.
"Drop debt, not bombs" and "IMF -- insensitive murdering fascists" were among the banners carried by protesters. But as the day wore on, philosophy gave way to practicality and some burned their placards for heat.
The turnout was far less than organizers had hoped for and paled beside the more than 50,000 people who took to Quebec's streets in April to rage against trade talks. Those protests turned ugly, causing over 500 arrests.
The protesters believe the IMF and World Bank foist ill-suited policies on poor countries.
Inside the meetings in a historic railway station that now serves as a government conference center, delegates defended globalization. "The idea that globalization in itself leads to a worse distribution of wealth in the world is just plain wrong," said German central bank chief Ernst Welteke.
Since the Sept. 11 attacks on the US, there has been a surge in efforts to combat the financing of extremist actions -- something the US sees as an integral part of its broader war against terrorism.
Some had hoped the IMF would adopt a leading role in that effort, helping coordinate the efforts of various watchdogs. But the communique suggested the fund is shunning the role of global policeman, for now at least.
The IMF will make every effort to help, but only within "its mandate and expertise" -- language indicative of keeping the status quo rather than taking a new leading role.
Given the bleaker global economic outlook after the Sept. 11 attacks on the United States, the IMF reiterated it stands ready to help emerging market economies with "sound policies."
Even before hijacked airplanes felled the twin towers of New York's World Trade Center and damaged the Pentagon, the world economy was on shaky ground. But the attacks severely dented the tourism and insurance industries as well as hurting consumer confidence, raising fears of the first global recession since the early 1990s.
The IMF has already slashed its growth forecasts, predicting what some say amounts to a global recession. The lender now expects world growth of 2.4 percent this year and next, about half the 4.7 percent seen last year, and a level seen by most private economists as recessionary.
Those latest IMF estimates were much lower than the 2.6 percent growth for this year and 3.5 percent for next year that it forecast in a September report compiled too late to gauge the full impact of the Sept. 11 attacks.
On Saturday, the IMF gave more a more detailed picture, which saw economic forecasts being slashed in almost every country on earth.
But German and French officials said they would stick to their own growth forecasts despite the IMF's bleaker view, which the United States has already dismissed as far too pessimistic.
US Treasury Secretary Paul O'Neill said the American economy remains sound and that recovery to a stronger pace of expansion should be apparent by early next year -- something much needed if the global economy is to shake its slump.
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