President Clinton declared Friday that the United States must aggressively combat the most serious challenge to the world economy in 50 years. He put forward proposals for keeping the U.S. economy from being drawn into a global recession.
Among the ideas: changing the way the International Monetary Fund works to allow it to give emergency loans more quickly to countries to head off the panicked rush that has flattened Asian nations and Russia.The new ideas will be discussed today by finance ministers and central bank presidents of the world's seven richest industrial countries - the United States, Japan, Germany, France, Britain, Italy and Canada.
If U.S. officials win backing for the ideas, they will then go to the annual meetings of the 182-nation IMF and its sister lending agency, the World Bank, to begin Sunday.
The IMF, which has assembled more than $100 billion in bailouts already for Thailand, Indonesia, South Korea and Russia, has come under heavy attack for pursuing programs that so far have failed to contain the economic troubles now threatening Latin America.
Treasury Secretary Robert Rubin met Friday with Brazil's finance minister, Pedro Malan, who has confirmed reports that Brazil is negotiating for a multibillion-dollar loan package from the IMF and other sources.
A package of $30 billion or more could be announced as soon as this weekend. The United States is working with the IMF to keep Brazil from becoming the crisis' latest victim.
Underscoring financial markets' jitters, Rubin's briefing on Clinton's initiatives sent the market plunging for a brief time when Rubin did not, as some investors had hoped, announce a Brazilian package.
By day's end, stocks had recovered to finish up 152 points on the Dow Jones industrial average after two days when blue-chip stocks had fallen by a total of 450 points.
Rubin said the United States would push several proposals at the upcoming meetings. But aides cautioned some were still in the preliminary stage and not likely to be approved during the meetings.
"This country has got to lead. . . . We've got to stay on the balls of our feet," Clinton said, blasting Congress for what he called an inexcusable delay in approving $18 billion to replenish the IMF.
"We can lead back from this financial precipice, but we need the resources to do it," Clinton said.
Half the world is in recession or experiencing very low economic growth, Clinton said. "We don't have to have a worldwide recession if those of us that enjoy growth will take the initiative and move now. But we just - we cannot afford to dally around here."
Clinton said he would participate personally in discussions that Rubin and Federal Reserve Chairman Alan Greenspan will hold Monday with finance officials from 22 nations, both rich and developing countries.
The United States is exploring the creation of a new "mechanism anchored in the IMF to provide contingent finance to help countries ward off global financial contagion," Clinton said.