Finance leaders endorse G7 plan to calm markets

By Lesley Wroughton

WASHINGTON (Reuters) - Finance leaders from the International Monetary Fund's 185 member countries on Saturday endorsed a plan by major economies to chart a course out of the credit crisis, hoping the broader support will calm markets.

Egyptian Finance Minister Youssef Boutros-Ghali, who chairs the IMF's policy-steering committee, said the fact that 185 countries, including emerging and developing economies, supported the Group of Seven plan should help restore confidence in financial markets.

"We are committed to the plan of action," Boutros-Ghali said, "This is an essential element for restoring confidence," he added.

The G7 on Friday vowed to take all necessary steps to unfreeze credit markets and ensure banks can raise money, and the IMF warned that concerns about more bank failures was pushing the global financial system to the brink of meltdown.

"This is a systemic crisis and therefore it requires systemic measures," Boutros-Ghali, the new chairman of the International Monetary and Financial Committee, told a news conference.

In a communique, the panel said the size and scale of the crisis called "for exceptional vigilance, coordination, and readiness to take bold action."

The financial crisis has dominated weekend meetings of the IMF and the World Bank, and distracted from Boutros-Ghali's appointment as the first finance minister from an emerging economy to head the IMF panel after years of European dominance.

"The mood in the IMFC was a mood of resolve, of unity, of focus, and of a decision by the membership that this requires cohesion. And that cohesion has been achieved today," Boutros-Ghali told the news conference with IMF Managing Director Dominique Strauss-Kahn.

Strauss-Kahn talked up the significance of the committee's statement supporting G7 action, calling it the first "coordination between advanced and the rest of the world."

Asked whether the G7 plan was enough, Strauss-Kahn said: "In the coming days ... what I expect is that the reaction by the different institutions will be positive enough to unfreeze the different markets and to restore the necessary funding."

TAKING THE REINS AGAIN

He said the committee had agreed the IMF should take the lead in drawing lessons from the crisis and to suggest actions to restore confidence, while also coordinating with other global institutions.

Strauss-Kahn also won member countries' backing for the IMF to activate emergency plans to help the institution respond quickly should a country need help.

Given the fund's universal membership it was the right body for the job, he added.

Strauss-Kahn said the IMF had sufficient resources to help any country in financial peril. Earlier this week he said the fund could also assist major economies, which have traditionally shunned the IMF advice.