RIYADH: Prime Minister Gordon Brown of Britain on Sunday called for billions of dollars in extra funding for the International Monetary Fund (IMF) to prop up struggling economies, as leaders from Berlin to Mumbai moved to support their economies.
On Saturday, the Indian central bank cut interest rates for the second time in two weeks, Russia put 170 billion roubles, or $6.4 billion, into a state bank and Chancellor Angela Merkel of Germay pledged support for an 'extensive investment package" to help the largest European economy.
Meanwhile, Prime Minister Wen Jiabao of China said maintaining the strong economic growth in China was his top priority.
Brown, speaking in Riyadh, said oil-rich Gulf States and China should contribute money for the monetary fund to lend to countries at risk of financial collapse.
"If we are to stop the spread of the financial crisis, we need a better global insurance policy to help distressed economies," Brown said.
Wen, writing in the ruling Communist Party's ideological journal, warned of growing domestic social risks from a global economic downturn.
"Against the current international financial and economic turmoil, we must give even greater priority to maintaining our country's steady and relatively fast economic development," Wen wrote in Qiushi, or Seeking Truth.
"We must be crystal-clear that without a certain pace of economic growth, there will be difficulties with employment, fiscal revenues and social development," he added, "and factors damaging social stability will grow."
China cut interest rates on Wednesday for the third time in six weeks to help the world's fourth-largest economy ride out the reverberations of the global financial crisis.
In India - like China, a magnet for foreign investment in recent years as their economies roared - the central bank on Saturday cut its main lending rate for the second time in as many weeks to ease a cash squeeze and spur economic growth.
Analysts said the surprise move showed Indian concern that strains on its economy were quickly becoming more severe.
"These actions were necessary," said Vikas Agarwal, a strategist at JP Morgan. "The situation was getting worse."
The Indian central bank cut the repo rate, its main short-term lending rate, by 0.5 percentage point to 7.5 percent and banks' cash reserve requirements by 1 percentage point to 5.5 percent.
"The global financial turmoil has had knock-on effects on our financial markets; this has reinforced the importance of focusing on preserving financial stability," the bank said.
Policy makers around the world have slashed interest rates in recent weeks and injected huge amounts into their banking systems to try to combat the spillover effects of the global crisis, which has caused credit markets to freeze up and threatens to plunge the world economy into recession.
In South Korea, where there have been concerns about banks' exposure to the global liquidity squeeze, the central bank said the financial system remained sound.
"There does not seem to be a likelihood of the unrest in domestic financial markets that originated in the international financial markets developing into a crisis for the Korean financial system as a whole," the Bank of Korea said in a scheduled report.
Banks everywhere have been racing to shore up their balance sheets after a spate of collapses and hastily arranged mergers prompted by heavy losses from bad mortgages and financial derivatives related to them.
In Riyadh, Brown said he welcomed investment by foreign countries, after the British bank Barclays tapped Abu Dhabi and Qatar for the bulk of a $12 billion investment on Friday.
"As long as they play by our rules and operate in a commercial manner, we welcome investment from sovereign wealth funds in the U.K.," Brown said.
Brown's tour of the Gulf precedes a global summit meeting in Washington on Nov. 15 at which he and some other world leaders will press for changes in the international financial system.
news by thearynews.com
