HC Deb 05 May 1999 vol 330 cc939-40
Q8. Mr. David Chaytor (Bury, North)

What proposals he has for the reform of the World bank and the International Monetary Fund.

The Prime Minister

The United Kingdom has put forward proposals for a far-reaching reform of the international financial architecture to promote greater transparency. Those proposals are designed to develop improved mechanisms for crisis prevention and resolution and to minimise the human cost of financial crises. Together with the initiatives that we are taking forward at the International Monetary Fund and the World bank, for debt relief and poverty reduction, they amount to a substantial package of measures. I hope to make progress on all those matters at the June Cologne summit.

Mr. Chaytor

I thank the Prime Minister for that reply and congratulate the Government on the international lead that they have given on this reform process. Does my right hon. Friend agree that, in the past, too often the International Monetary Fund particularly has been the problem and not the solution in times of financial crisis? Does he agree also that an external evaluation system is needed for the IMF to improve its scrutiny and accountability, such as currently applies in the World bank?

The Prime Minister

The UK has been a proponent of greater transparency in the IMF. I believe that the IMF, particularly under Michel Camdessus, has done excellent work in many parts of the world. However, the most important single problem that we face is constructing the financial architecture, both in greater accountability and transparency of national financial systems, that allows us to be able to deal with financial crises in a much better way.

That is for the long term. For the short term, we have to ensure that there are sufficient funds available to help any country through a short-term liquidity crisis. We support reforms in the IMF, but I think that further reforms are necessary to make the system work.

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