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UPDATE 1-US's Geithner urges push to implement agreed reform

Published 04/26/2009, 11:09 AM
Updated 04/26/2009, 11:32 AM

(adds quotes, details, background, comments by White House's Summers)

By Glenn Somerville

WASHINGTON, April 26 (Reuters) - U.S. Treasury Secretary Timothy Geithner said on Sunday that it was vital to speedily implement agreed plans to bolster resources of global lenders and put in place policies to stimulate growth.

Speaking to the development committee of the International Monetary Fund and World Bank, Geithner said the United States would take whatever policy actions were needed for as long as necessary to spur a recovery, and urged others to do the same.

"Now that we have achieved unprecedented agreement on the right strategy and the right set of tools, we need to keep the pressure on to execute quickly and achieve a lasting, shared recovery," Geithner said.

"The United States will sustain action as long as necessary to see growth resume, not just nationally but globally -- an objective that is important not just for our shared prosperity but for our national security," he added.

Geithner noted that the Group of 20 political leaders who met in London on April 2 backed ambitious plans for multilateral development banks to expand lending to over $300 billion during the next three years. That includes plans by the World Bank to provide up to $100 billion of funding for the International Bank for Reconstruction and Development.

"Going forward, we encourage the World Bank Group to continue to explore flexible approaches, such as guarantees, to leverage official and private capital to address development needs," Geithner said.

He said the lenders needed to strengthen their own risk management procedures and ensure there was adequate cooperation between the IMF and World Bank to make sure they were achieving development goals like cleaner air and water.

But Geithner said the lenders need backing from all their members in the form of policies that help, not hurt, the poorest countries, including a commitment to resist protectionist trade measures. The Obama administration, he said, would meet its own commitments help poorer countries.

"The drop in trade flows is leading to precipitous declines in export revenues in developing countries, and maintaining access to international markets will be key to a balanced, sustainable global recovery," he said.

Regarding the U.S. economy itself, White House economic adviser Lawrence Summers said the sense of "freefall" in the U.S. economy seemed to be easing. There still were "serious problems" but there were at least a few hopeful signs, he said in an appearance on "Fox News Sunday".

"Six or eight weeks ago, there were no positive statistics to be found anywhere. The economy felt like it was falling vertically. Today, the picture is much more mixed," Summers said.

Summers had some reassuring words about the U.S. banking system, which is undergoing "stress tests" to see how well equipped it is to weather further economic deterioration.

He said the "vast majority" of U.S. banks were well capitalized but said there is work that needs to be done.

"It can be done in many ways, by raising private capital through exchanges, back-stopped by government capital where necessary. But I think we're going to be in a good position to provide the support and set the framework in which the banking system can move along the process of recovery," Summers said.

(Reporting by Glenn Somerville, additional reporting by Will Dunham and Donna Smith, Editing by Chizu Nomiyama)

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