URGENT talks are to be convened at the International Monetary Fund, which was given new powers at the weekend to address mounting strains in the world economy. Talks among the world’s key economic players are likely to include the United States, China and the eurozone and will be orchestrated by Rodrigo de Rato, the IMF’s managing director.

They are expected to culminate in what Gordon Brown said on Saturday would be a “reform summit” during the Fund’s annual meeting in Singapore in September.

Moves to give the IMF an enhanced role in co-ordinating multinational efforts to address the global imbalances shown by the vast US current account deficit come amid signs of increasing stresses in the world economy. These were a central focus of weekend talks in Washington among finance ministers and central bank governors of economies worldwide.

The extension of the IMF’s powers to let it police the links and “spillover effects” between the world’s key economies, and to bring selected countries together to try to resolve misalignments and imbalances, was endorsed at the weekend by the ruling International Monetary and Financial Committee (IMFC) of the Fund’s 184 member states, chaired by Mr Brown.

The crucial change was also backed late on Friday by finance ministers and central bank chiefs from the Group of Seven (G7) leading economies.

“We resolve to make the IMF more fit for purpose in a global economy, and more able to address challenges that are quite different from those of 1945, when the IMF was created,” the Chancellor told a news conference in Washington. “The IMF should be more able to address global questions with multilateral surveillance.”

Señor de Rato last week said that broadening the Fund’s role from the previous position, in which it was mainly limited to one-to-one reviews of member economies, was crucial to helping nations to co-ordinate economic policies, and for preventing a disorderly unravelling of the global imbalances.

“Co-ordinated action will be both politically easier, and economically more effective than governments in systemically important countries acting alone,” he said. “These consultations will enable the Fund and members to propose actions to address vulnerabilities that affect individual members and the global financial system.”

The IMF chief emphasised that a key part of the proposals was that the discussions that the Fund can now call could range beyond the elite G7. “The days when the G7 finance ministers could sit in a hotel room and make decisions about exchange rates are gone,” he said, in a reference to the G7’s 1985 Plaza Accord to weaken the dollar.

The weekend decisions come amid increased anxiety among policymakers over risks from imbalances, including the danger of a slump in the dollar, as well as other threats such as a fresh price surge in oil to record levels above $75 a barrel and a growing climate of protectionism.

The G7 added an annexe on imbalances to its post-meeting communiqué and the IMF held a special weekend debate on the problem by invited experts, ministers and central bankers.

The G7 and the IMFC also approved an enhanced role for the Fund in policing exchange rates, with G7 ministers again turning up the heat on China to let its yuan currency rise more sharply. The G7 declared: “In emerging Asia, particularly China, greater [currency] flexibility is critical to allow necessary appreciations.”

The IMFC gave Señor de Rato approval to press on with devising proposals to adjust IMF member states’ voting quotas amid tensions between big economies and developing nations over the changes’ form.

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