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A pledge to lower oil prices
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September 24, 2000: 1:56 p.m. ET
Ministers agree at IMF meetings to cooperate to keep prices contained
By Staff Writer M. Corey Goldman, with Heather Bourbeau
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PRAGUE, Czech Republic (CNNfn) - The world's oil producing nations have pledged to cooperate to keep the price of oil within a "reasonable" level to ensure the global economy does not fall into a slump, leading ministers and finance officials said Sunday.
The International Monetary and Financial Committee, the International Monetary Fund's policy arm, said that at least some oil-producing countries had signed an agreement "on the desirability of stability in oil markets around reasonable long-term prices," the group's official communiqué said. All countries were in agreement that the price of oil is currently too high and needs to come down.
 The pledge marks a concerted effort among the world's rich and developing countries to ensure that skyrocketing oil prices don't crimp global growth and undermine countries' economies - particularly those that are dependent on importing the commodity to refine as heating oil and fuel for consumers.
"Where I think there is common ground now, and I think that goes for producer and consumer countries, is that everyone agrees we must have more stable long-term oil prices," said Gordon Brown, the U.K.'s finance minister and chair of the committee. "We have a signed document, for the first time, on the need for a stable oil price," he said.
Oil producers aware of impact
Also noted within the committee's statement was a willingness among other countries to contribute their own supply of oil to world markets to boost availability and lower global prices. Brown declined to elaborate on which members would be willing to contribute additional reserves, as the United States did last week.
"There is an awareness among oil producing countries that this extreme oil price is not in their best interest," echoed IMF Managing Director Horst Koehler. "I think oil producers are well aware of their impact on the global economy, specifically on the world's poor," he said.
While the group opted not to define what a "reasonable" price for oil is, Brown noted that the committee relied on OPEC's official target price corridor of between $22 and $28 dollars per barrel in its assessment. "We agreed that further steps must be taken," he said.
Oil producing nations Saudi Arabia, Algeria, Russia and the United Arab Emirates are all members of the 24-member committee of the IMF, which agreed to the statement during the IMF-World Bank meetings in Prague.
Oil prices closed day Friday at $32.68 per barrel on the New York Mercantile Exchange, down from last week's peak near $35 per barrel.
Positive outlook, but still risks
The IMFC also said the world economic outlook was promising, but it expressed concern about high share valuations in world stock markets and "misalignments" in major currency exchange rates.
"While the overall outlook is positive, the committee remains mindful of the remaining risks associated with the continuing economic and financial imbalances in the global economy," the statement said.
 "These potential challenges include imbalances in external accounts and the possible risk from misalignment in exchange rates, and high levels of equity valuations in the major currency areas," it said.
Membership of the IMFC almost mirrors that of the IMF's Executive Board, where almost half the members are representatives of a single country and the rest represent constituencies of countries. Officials from OPEC, the World Bank, the World Trade Organization and other groups also sit in as observers.
As for debt relief for some of the world's poorest nations, under a program known as the Heavily Indebted Poor Country, or HIPC initiative, the IMFC welcomed the commitment of the fund and the bank to bring 20 countries to a decision point on the provision of funding by the end of 2000. It also encouraged its other members, notably its wealthy ones, to meet their commitments to financing the $70 billion initiative.
Oil to hurt poverty initiative?
The committee noted that recent shocks in trade due to high oil prices and low prices for non-oil commodities shouldn't be allowed to jeopardize the HIPC initiative on poverty reduction. These factors have lowered the prices fetched by goods exported by poor but resource-rich countries.-
"The Fund, through its facilities, may need to respond flexibly to the needs of members that arise from a sustained period of high oil prices," the group said.
French Finance Minister Laurent Fabius reiterated that view, suggesting in his own statement following the IMFC meeting that high oil prices could "derail economic expectations of economic agents, and put public budgets in danger of new imbalances."
"It would be illusionary to concentrate on mechanisms of financial aid to these countries (non-oil-producing countries in Asia, Africa and the Caribbean) if at the same time a petroleum shock were to destroy their efforts and ours," he said. 
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