G7 plan to prevent financial turmoil

DETAILS OF a plan to tackle turmoil on financial markets and redesign the global financial architecture are expected to be announced today by the US and other governments.

The Group of Seven leading industrialised nations are expected to spell out the plan first hatched at the International Monetary Fund and World Bank meetings this month in Washington. It would include a new fund available to countries such as Brazil, which want to head off financial unrest before it starts.

President Bill Clinton discussed the idea with German Chancellor, Gerhard Schroder, yesterday, his spokesman said. Earlier in the week he spoke to other leaders, including Tony Blair. The President and the Prime Minister had previously discussed holding a financial summit in London to launch the ideas, but that has been hamstrung by disagreements about who should be involved.

As part of the review the World Bank is to introduce a new facility that can be disbursed more rapidly to countries in trouble, called the Emergency Structural Adjustment Loan.

"It's emergency financing, and it's to supplement the International Monetary Fund," James Wolfensohn, the World Bank president, said yesterday.

Colombia will be an early beneficiary of the new package, and Brazil is also expected to receive cash under both the World Bank facility and a new IMF-based arrangement proposed by Mr Clinton. Brazil is expected to get $30bn to help it head off financial turmoil.