The International Monetary Fund said Tuesday that it needs greater powers to anticipate and handle any future economic crisis, even as protesters facing police water cannons and tear gas claimed the fund was merely helping rich countries.

The IMF has been designated by world leaders to oversee the global economy and avoid risky imbalances, but the Fund has warned that it will need a broader reach to tackle some issues effectively.

"This crisis had very little to do with current accounts and currency movements, the traditional focus of the Fund's attention," said Dominique Strauss-Kahn, the IMF's managing director.

"In an era of high-volume and fast-moving capital flows that can extend to every corner of the world, we need a broader mandate," he said at the plenary session of the annual meetings of the IMF and the World Bank. Strauss-Kahn said the IMF's mandate needed review, assessing all policies that affect global economic stability.

The conference centre hosting the meetings was heavily guarded, and protesters were kept well away from the site. In a nearby shopping district, though, hundreds of stone-throwing demonstrators skirmished with police and some masked protesters shattered the windows of a McDonald's restaurant and several Turkish and foreign banks.

Proposals

IMF and World Bank officials, along with finance ministers from rich and developing countries, have held several days of talks, with much of the discussion focusing on proposals for voting reforms that would give developing nations more say in the institutions.

Those internal changes would reflect the growing clout of emerging market countries in the global economy, which is struggling to emerge from the deepest recession since World War II.

The IMF, in which the United States has the biggest voting share, has faced accusations that it imposes austerity measures in exchange for loans without regard for the social impact on the poor. The group has sought to show more flexibility in recent years, citing a willingness to give developing countries a bigger say in its decision-making process.

On Sunday a key panel of the IMF said it supports giving more voting power to emerging market and developing countries, warning that the legitimacy of the institution was at stake.

The group's International Monetary and Financial Committeesaid it backs a shift of at least five per cent of voting power from countries with ample representation to those with little influence.

The move would seek to reflect changes in the global economy, with strong growth in countries that once lagged far behind the elite club of rich nations.

"Quota reform is crucial for increasing the legitimacy and effectiveness of the Fund," the committee said in a statement.

It planned to review progress at its next meeting in Washington on April 24, and sought an agreement on the voting shift by January 2011.

The change would then be subject to approval by the legislatures of some member countries.

Protection

"This is a process that will take time. It won't happen overnight," said committee chairman Youssef Boutros-Ghali. "We are reforming an organisation that is complex, sophisticated and reaching every corner of the world economy."

The committee, which sets the IMF's agenda, said it was also committed to protecting the voting share of its poorest members.

Turkish Prime Minister Recep Tayyip Erdogan on Tuesday noted the tension between rich and poor countries, saying voices of protest must be heard.

"While a part of the world is consuming limitlessly, the other part of the world is fighting to stay alive because of hunger," he said in a speech at the IMF meeting. "We must lend an ear to the screams that arise from the world, to demands and to protests that are going on outside this hall."

Many developing countries also point to the origin of the crisis in the United States, where American consumers, the traditional pillar of the world economy, were hurt by the collapse of the housing bubble and the fallout from the credit crunch.

Shift in the power

A shift in the economic power balance was recognised at a Pittsburgh summit where the Group of 20, a forum of rich and developing countries, was declared the world's main economic decision-making forum, instead of the G-7 group of rich countries.

At that meeting, Group of 20 leaders agreed to redistribute at least 3.0 per cent of voting power in the World Bank and 5.0 per cent in the IMF. The G-20 includes developing economic powerhouses such as China, India and Brazil.

The Washington-based World Bank loans money and makes grants to developing and poor countries to pay for investment in education, health care, infrastructure, agriculture and natural resource management.

The IMF fosters global monetary cooperation to facilitate interna-tional trade, and has bailed out a number of cash-strapped govern-ments that ran into trouble during the global financial crisis.

In Istanbul, the United States noted that the G-20 had asked the IMF to analyse whether the world's major economies were implementing economic policies in line with growth goals.

"For the IMF, this means that rigorous surveillance must help us shed light on trends that could lead to the next unsustainable boom," US Treasury Secretary Timothy Geithner said in a statement at the plenary session. "The IMF will need to be a truth-teller."

Geithner's statement was read by Mark Sobel, acting assistant secretary of the treasury.

World Bank President Robert Zoellick said the bank delivered a record US$59 billion of financial assistance last year, but warned that fiscal constraints loom next year.

He welcomed a decision by the bank's development committee, which sets policy, to ensure sufficient resources.

"This is an important step forward in the first general capital increase for the World Bank in 20 years," Zoellick said.

- AP