Chiefs urge IMF to sharpen crisis radar

By Lesley Wroughton

WASHINGTON (Reuters) - World finance officials on Saturday urged the International Monetary Fund to keep closer tabs on the global economy in the hope future crises like the one currently shaking world markets can be prevented.

After one of its twice-yearly meetings, the IMF's 24-nation steering committee said global financial instability had increased and inflation risks had risen due to a sharp run-up in the cost of food and other commodities.

"Policy-makers should continue to respond to the challenge of dealing with the financial crisis and supporting activity, while making sure that inflation is kept under control," the International Monetary and Financial Committee said in a post-meeting communique.

As rich countries struggle to get a handle on financial turmoil that has rocked markets for nine months and worry the U.S. dollar may have fallen too far, emerging and developing nations wondered whether they would be spared from a crisis that may have already pushed the U.S. economy into recession.

The IMFC said developing economies had shown resilience in the face of the crisis sparked by mounting U.S. mortgage defaults, but cautioned that inflationary risks had picked up.

"For many counties, containing inflation and addressing vulnerabilities remain key priorities," it said.

Concerns over rising prices for food and other commodities, and related shortages of key staples, has shaken developing economies worldwide, sparking often-violent protests. Haiti's government fell on Saturday after senators fired Prime Minister Jacques Edouard Alexis following a week of food riots.

Developing countries called on the IMF and World Bank to stand ready with emergency funding to help the poorer nations of the world in case financial market woes spread to their economies and the food crisis worsened.