The International Monetary Fund and the World Bank held talks Saturday about aid to Arab countries whose economies have suffered as their people push ahead with democratic reforms. Persistent weakness in the global banking system also was in focus, as the head of a panel tasked with global financial reform after the 2008 crisis warned of ""pockets of weakness"" that need immediate repair.

Addressing a closed-door meeting of the International Monetary and Financial Committee (IMFC), the IMF's 24-nation steering panel, Financial Stability Board chief Mario Draghi stressed that ""sovereign and banking risks are closely intertwined in some countries."" ""There is a need to decisively press ahead with the repair and strengthening of weak banking systems, using the forthcoming rounds of stress tests to address expeditiously any weak points identified,"" said Draghi, the head of the Italian central bank, according to the text of his speech.
In Europe, authorities plan to submit 90 banks, representing more than 65 percent of banking assets in the European Union, to new, tougher stress tests this year in a bid to reassure markets unnerved by Ireland's banking crisis. The IMFC meeting will be followed later in the day by a meeting of the Development Committee, which advises the IMF and the World Bank on aid to developing countries.
The top-level talks come as finance ministers and central bank governors from the 187 member nations of the Bretton Woods institutions hold their annual spring meetings in Washington. The IMFC was directly affected by the pro-democracy turmoil that swept the Arab crescent this year and toppled governments in Tunisia and Egypt.
Until February it was headed by Egyptian Finance Minister Youssef Boutros-Ghali, who was obliged to step down after he was fired, along with half the government, by then-president Hosni Mubarak in Cairo. A week later, Mubarak was ousted by popular revolt. The IMFC chairmanship went to Singapore's finance minister, Tharman Shanmugaratnam.
The post-revolution period in Egypt and Tunisia and aid to other Arab countries swept by protests seeking Islamic social justice and better economic futures have been the center of attention in Washington since Thursday. France, this year's president of the Group of 20 major economies, and the United States announced Thursday a ""joint action plan"" for five international financial institutions to aid development in the Middle East and North Africa.
The IMF was tasked with providing an economic evaluation of the countries potentially involved, initially seen as Tunisia and Egypt. According to AFP estimates, the oil-exporting Arab countries are benefiting from surging oil prices. But those that import oil were forecast to have 2011 economic growth of about 2.0 percent, far too weak to create jobs for rapidly growing populations faced with high energy and food prices.
The IMF managing director, Dominique Strauss-Kahn, pointed out Friday that certain sources of revenue, such as tourism, could decline from last year's levels due to the political turmoil. ""We can together build a better future for these countries. And that's not only important for Egypt and Tunisia, it's important for the whole world because this example is an example that is going to have a lot of consequences,"" Strauss-Kahn said. The IMF chief said the institution was ready with aid if asked. But Tunisia and Egypt have so far not done so.
The IMF, which has sent staff mission to Tunis and Cairo, is at this stage still evaluating the situation. And the Tunisian and Egyptian delegations in Washington are looking first to other sources of financing. Tunisian authorities negotiating with a number of countries and development agencies at this point ""have not yet seen any additional financing needs that need to be met from the Fund,"" Masood Ahmed, IMF director for the Middle East and Central Asia, said Friday.
Egypt is consulting with the IMF and is studying its financing options ""before making a firm decision whether and what kind of financing they might need from us,"" Ahmed said. Beyond financial questions, the anger on the street has pushed the world's economic leaders to rethink their priorities and their models. ""In its economic dimensions, the upheaval in the MENA region is not only a reflection of discontent over jobs, low wages and poverty, but also represents a day of reckoning for trade and economic policy choices made in the region over past decades,"" the secretary general of the UN Conference on Trade and Development, Supachai Panitchpakdi, said in a statement to the IMFC.
(Source:kuwaittimes.net)