Leaders urge IMF to act against financial risks

Watford, England: Centre-left leaders from around the world on Saturday called for urgent reform of global financial institutions to prevent a recurrence of the credit crisis.

About a dozen leaders, brought together by British Prime Minister Gordon Brown, issued a communique urging the International Monetary Fund (IMF) to help develop an effective early warning system to guard against financial risks to the global economy.

Australian Prime Minister Kevin Rudd said the world had to learn the lessons from the credit crisis, sparked eight months ago by massive default on US subprime mortgage debt.

"Too often in the past when these sorts of events have occurred... the lessons are lost. The lessons must be learned and applied, otherwise we will face a very rocky future indeed," Rudd said after the 'Progressive Governance' conference outside London.

The leaders, also including South African President Thabo Mbeki, New Zealand Prime Minister Helen Clark and Austrian Chancellor Alfred Gusenbauer, gathered just before key Group of Seven and IMF meetings in Washington next week which will discuss the financial turbulence.

Also attending were the heads of the IMF, World Trade Organisation, the African Development Bank and several United Nations agencies.

The leaders heard a gloomy economic update from IMF Managing Director Dominique Strauss-Kahn, who said most of the downside risks to the world economy feared six months ago had now become a reality. "The forecasts we are going to release in a few days are not really improving," Strauss-Kahn said.

Brown said there was general agreement among the leaders on the need for new rules for disclosure and transparency for financial institutions.

Brown is pressing for global, rather than national supervision of financial markets and for banks to come clean on the losses they have suffered due to the sub-prime crisis.

Developing country leaders said rising food and energy prices were hitting poor countries hard.