Speaking ahead of the first meeting of the Group of 20, a new group bringing together developed and important developing countries, Mr Summers said the IMF should lend only short term and more selectively, and must become more transparent and representative. "The IMF needs to be more limited in its financial involvement with countries, lending selectively and on short maturities," he said, speaking at the London Business School last night ahead of a meeting at the Treasury this morning.
"It can and must be in the front line of the international response to financial crisis; it should not be a source of low-cost financing for countries with ready access to private capital, or long-term welfare for countries that cannot break the habit of bad policies."
Mr Summers backed the IMF's tradition of enforcing tough macroeconomic policies on crisis-affected countries. He said those such as Mexico, Korea, Thailand and Brazil, which had implemented IMF programmes, had recovered strongly.
His comments on the need for internal reform will carry great weight in the choice of a new managing director for the IMF. Michel Camdessus will step down in February.