IMF urges G20 to take more monetary and fiscal action

SAO PAULO (Reuters) - The International Monetary Fund wants next weekend's summit of G20 leaders in Washington to discuss additional monetary and fiscal policy responses to the global financial crisis.

In a letter to the heads of government of the Group of 20, which includes major industrialized powers and leading developing nations, IMF Managing Director Dominique Strauss-Kahn said countries need to do more to limit the fallout of the credit crunch battering the world economy.

"Additional monetary and fiscal policy responses need to be on the agenda," Strauss-Kahn said in the letter dated November 6 and obtained by Reuters on Saturday.

"There is scope for fiscal expansion in many advanced and some emerging market economies; and with inflation declining, some central banks have scope for further monetary easing."

Strauss-Khan met G20 finance officials and central bankers on Saturday in Brazil's business capital of Sao Paulo. The meeting is expected to help lay the groundwork for the Washington summit of G20 leaders on November 14-15.

Strauss-Kahn said the G20 leaders going to Washington must ensure that the IMF is adequately funded to do its job of helping countries withstand the financial turmoil.

He went on to say he "strongly endorses" calls for a "new Bretton Woods agreement" to reshape the global financial system but cautioned that such an overhaul should not be rushed.

In a nod to demands from emerging economies for a greater say on the global stage, the letter also advocated expanding existing international forums to be more representative of the world economy.

"There is a need for a suitably sized and representative group of key policymakers able to agree on a consistent approach that might frame follow-up at the national and multilateral levels," Strauss-Khan wrote.