WASHINGTON (Reuters) - Treasury Secretary Henry Paulson said on Saturday that emerging market countries are not immune to the most serious global economic risks in recent memory and must be careful in their policy choices.
In prepared remarks before the International Monetary Fund's steering committee, Paulson also urged the IMF to stay focused on its core missions, including currency surveillance and helping low-income countries avoid a return to debt distress.
Paulson said the financial turmoil, commodity price shocks and housing price declines were causing a "sharp slowdown in economic growth."
"The largest advanced economies are feeling this most acutely. Emerging market countries have made impressive strides in strengthening fundamentals, enabling their economic growth to accelerate and their economies to be better cushioned against external shocks," Paulson said.
"Nevertheless, emerging markets are not immune from the global financial stress, and policy-makers need to be especially attentive to implementing measures to support noninflationary growth, enhance economic resilience, and ensure sound financial systems," he said.
Paulson reiterated that the United States was taking a number of steps to stem the crisis, including the creation of a $700 billion program that would allow the Treasury to purchase mortgage assets and take equity stakes in financial institutions.
He said the IMF must focus on implementing its recent decision to increase exchange rate surveillance.
"This will require IMF staff to apply its considerable technical expertise to make tough judgments and the (IMF) board to ensure IMF assessments are clearly and candidly conveyed," he said.
Paulson said the fund must resist seeking "creative" ways to boost lending for its own sake, and said he would take a skeptical view of any fund proposals to significantly increase the upper limit individual countries are allowed to borrow.
But the United States remains supportive of a short-term stabilization tool, such as a standby arrangement, for low income countries and is open to a well designed liquidity instrument for middle income countries.
He also called for continued cooperation between the IMF and the multilateral Financial Action Task Force to combat money laundering, terrorist financing, weapons proliferation finance and other financial crimes, and urged nations to implement United Nations sanctions against Iranian institutions.
(Reporting by David Lawder; Editing by Tim Ahmann)