Jomo: Consult the rest of the world on global crisis

THE rest of the world needs to be consulted on how to respond to the global economic and financial crisis, said United Nations (UN) assistant secretary-general for economic development, Dr K.S. Jomo.

He said there was a need to include most, if not all, countries because their views were needed to identify and address the complex issues related to the economic and financial crisis.

“It does not mean everyone will have equal weight but I think that at the turn of the 21st century, we should make an effort to be more inclusive,” Jomo said.

He was speaking to reporters after giving a talk on the global financial crisis at an event organised by the Chevening Alumni of Malaysia on Thursday.

Dr K.S.Jomo

Jomo and Bank Negara Governor Tan Sri Dr Zeti Akhtar Aziz were recently elected members of the UN Commission of Experts on Reforms of the International Monetary and Financial System.

Jomo said the 170 countries whose opinions were not heard at the recent G20 summit in Washington, DC, were unhappy at their exclusion.

“Hong Kong and Singapore are major regional financial centres but they were not represented. Are they being ignored just because of their size?” he asked.

Jomo said that at present, there was no proper platform to discuss or coordinate policy options for the crisis.

“We need to have informed public debates on this so that we can generate ideas for the policies,” he said adding that there was a need to start a rapid process of sharing knowledge and really understand how the crisis affected different countries.

Jomo noted that the cooperation between the US, Japan and Europe had been less than evident.

“The US leadership is found lacking in this respect,” Jomo said, adding that British Prime Minister Gordon Brown had played a more important role in coordinating the European response to the global economic slump.

He said there were three challenges that had to be addressed – containing the spread of the financial crisis, ensuring sufficient liquidity in the system and stressing the importance of fiscal stimulus packages. Jomo observed that financial globalisation has grown much faster than a real growth in trade.

“Financial globalisation has been the major contributor to global growth but it has not contributed to economic growth and has actually increased volatility,” he said, citing studies conducted by Kenneth Rogoff, a Harvard University professor and former International Monetary Fund economist.

On Malaysia’s response to the crisis, Jomo said the RM7bil fiscal stimulus “is not a bad idea as the local economy is not insulated from what is going on at the global stage and decoupling of Asian economies from the rest of the world is unlikely.” The Government would have to be aware of the fiscal deficit since it had not been frugal when times were good but still needed to spend when times are bad, he said, adding: “We’ve had 11 years of fiscal deficit.”

The Star