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All eyes on markets; FM asks World Bank, IMF for help
Published on Mon, Oct 13, 2008 at 08:37, Updated on Mon, Oct 13, 2008 at 22:46 in Business section
Tags: Financial Crisis, P Chidambaram , New Delhi
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New Delhi: All eyes will be on markets on Monday after the last week proved to be one of the worst in the history of Indian stock markets.
The global meltdown has already pulled Indian equities down over 16 per cent in last week and tripped industrial growth to its lowest in a decade.
Voicing concern Union Finance Minister P Chidambaram has asked the World Bank and International Monetary Fund (IMF) to step in.
Chidambaram wants the IMF to ensure liquidity in markets to boost consumer confidence and said developing countries are suffering through no fault of theirs.
Speaking at a Reserve Bank of India meet, Chidambaram said, "Emerging markets have so far shown resilience, but accessing financial resources might become more difficult and expensive."
"This is an opportunity to make the World Bank a more responsive, credible and relevant organisation and to realign its role. A global recession will sharply contract the demand for exports of many developing countries, adversely affecting their growth prospects," Chidambaram said.
The World Bank has agreed to do its best to protect poor and vulnerable countries from the financial crisis.
"Our meeting took place at a critical time for the global economy, with financial markets experiencing unprecedented turmoil. Developing countries, many of them already hit hard, with high prices for energy and essential food stuffs, risk very serious setbacks to their efforts to improve the lives of their populations for many prolonged tightening of credit or a sustained global slow down. The poorest and most vulnerable groups risk the most serious, and in some cases, permanent damage," World Bank President Robert Zoellick said.
At a joint meeting of the World Bank and IMF on Sunday in Washington, the head of the bank's policy-setting committee, Mexico's Finance Minister Agustin Carstens, said that the Bank will try to remain flexible in dealing with the differing circumstances that might prevail in poor countries and rapidly developing economies.
Another emergency meeting of 15 European nations to chalk out a strategy to deal with ongoing financial crisis concluded in Paris.
The 15 Eurozone leaders agreed to guarantee inter-bank lending and safeguard financial institutions from collapse.
British Prime Minister Gordon Brown said a comprehensive plan to inject more cash into financial markets is in the offing.
"Today we discussed a plan which is a comprehensive plan, that would involve not only more cash in the financial markets but also the re-capitalisation of our banking system and allied to that, something that I believe is absolutely crucial, to begin again the funding of businesses and mortgages with a guarantee given to governments," Brown said.
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Goes to show that the FM was taking us for a ride,probably to avoid a panic.
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