Horst Kohler

WASHINGTON As world financial leaders gather this week for the annual meeting of the International Monetary Fund and the World Bank in Prague, the IMF once again will be vilified on the streets as a symbol of evil in an unfair global economy. But in a noteworthy shift, the much-maligned global lender now confronts a critic whose demands for change cannot be ignored--its own boss.

WASHINGTON As world financial leaders gather this week for the annual meeting of the International Monetary Fund and the World Bank in Prague, the IMF once again will be vilified on the streets as a symbol of evil in an unfair global economy. But in a noteworthy shift, the much-maligned global lender now confronts a critic whose demands for change cannot be ignored--its own boss.

The global situation may not be nearly as dire as Robert Reich presents (Commentary, Nov. 6). The forceful actions of the U.S. authorities to loosen the reins on monetary and fiscal policy, now mirrored by similar actions in Europe, should go a long way to prevent his worst-case scenario from materializing. Reich is off base in accusing the International Monetary Fund of insisting on fiscal austerity as the quid pro quo for financial assistance. The fund rarely advocates balanced budgets; instead, it works with governments to devise the fiscal policy stance appropriate to a country's circumstances.

Japanese stocks fell in early trading today with the Nikkei touching a 17-year low. But the banking sector was buoyed by optimism that Financial Affairs Minister Hakuo Yanagisawa will accept a request by the International Monetary Fund to inspect Japan's banking system. At midmorning the Nikkei-225 stock average was down 29.41 points, or 0.3%, to 10,684.10 on the heels of a four-day, 5% drop. The Topix index of all shares on the Tokyo Stock Exchange's first section was off 0.5% to 1,097.92.

Walking a tightrope between the expectations of the poor and the demands of the elite that manage this country's wealth, the man Brazilians now call President Lula is proving to be quite an acrobat. Just over 100 days into his presidency, former trade union leader Luiz Inacio Lula da Silva has retained the loyalty of the more radical elements of his Workers' Party.

Leaders of the world's biggest economies pledged Saturday to take further steps if needed to head off a global recession and promised to intensify their efforts to cut off the flow of funds to terrorists. Representatives of the Group of Seven nations--the United States, Canada, Japan, Britain, France, Germany and Italy--declared their determination to keep the Sept. 11 attacks from crippling the world economy.

A few years ago, Carlos Menem, then president of Argentina, was famous for embracing all things American. One of his ministers said Argentina would be so closely allied to the United States they would have a "carnal" relationship. Nestor Kirchner, the current president, is more of a fighter than a lover. A week before his meeting with President Bush on Tuesday, in response to a question from the media here, Kirchner said if the two men boxed he would beat Bush "by a knockout."

Facing high unemployment and an inability to reform the welfare state, German Chancellor Gerhard Schroeder deliberately lost a confidence vote in Parliament on Friday, opening the way for early elections that are expected to push his liberal coalition from power. Schroeder called for the vote after a series of political defeats and widening divisions within his Social Democratic Party over how to reform one of Europe's most generous welfare systems.

Following days of uncertainty, hoarding and repeated calls for calm, Argentina allowed its currency to float freely against the dollar for the first time in a decade Monday. The peso slipped slightly in value but did not suffer the free fall many feared. Hundreds of people lined up outside exchange houses in Buenos Aires, the capital, where the dollar sold for about 2.1 pesos, a drop of about 5% from the peso's unofficial value Friday.

On a mission to reclaim the wavering souls of Christianity's young generation, Pope Benedict XVI made his first foreign pilgrimage Thursday in a test both of his ability to woo a crowd and to build bridges to other faiths. Returning to his German homeland for the first time since his election as pope four months ago, Benedict arrived in this graceful Rhineland city to lead World Youth Day.

The collapse of Argentina's economy despite repeated bailouts could lead to significant changes in the way the International Monetary Fund and its member governments respond to financial crises in the developing world, officials and experts say.