SYDNEY: IMF chief Christine Lagarde and British finance minister George Osborne on Thursday demanded emerging economies get their own houses in order, after some attacked US monetary policy in the run-up to G20 talks this weekend.

While Lagarde also cautioned the US Federal Reserve to be “mindful” of the impact of its stimulus exit on major developing players, Osborne urged emerging markets to refrain from “finger-pointing and distractions” at the Sydney meeting of G20 finance ministers and central bankers.

Countries including Argentina, India, Russia, South Africa and Turkey have suffered sharp losses to their currencies as a by-product of the Fed's “taper” — the ending of a mammoth stimulus programme that is seeing capital flows switch abruptly away from the developing world.

Lagarde said “just a hint of tapering” in May last year had sent ripples through the markets and the International Monetary Fund had asked “the US authorities, particularly the Fed, be mindful of what's happening elsewhere when you do what you have announced”.

“Don't go too fast and explain what you are doing,” the IMF chief said in a public question-and-answer session recorded for ABC television in Sydney, describing the issue as “high on the agenda” this weekend.

But she said a “mind the shop at home” message also applied to the developing economies.

“In other words, emerging market economies, you need to look after your various equilibriums.

“You need to look at your fiscal policy, you need to look at your monetary policy, you need to have the house in order to resist the volatility that can be induced from the tapering of the US Fed, in particular, at the moment.”

Lagarde's remarks were echoed by Britain's finance minister, who said it was “neither accurate nor useful” to blame Western monetary policy for shaky currencies or high deficits in emerging markets.

“The underlying causes are domestic fragility in those countries, often built up over a long period of time — and that is why some emerging markets have been much more affected than others,” Osborne, who heads to Sydney on Friday, said in a speech to business leaders in Hong Kong.

“We all need to get our houses in order.”

‘Europe not over-represented’

Meanwhile, German Finance Minister Wolfgang Schauble on Thursday defended Europe’s strong presence at the G20, arguing that it is not over-represented despite accounting for barely 20 per cent of the global economy.

“I do not share the view that Europe is over-represented in the G20,” the German, arguably the most powerful finance minister in Europe, told the Australian Financial Review.

“According to GDP, trade and other economic figures, the EU is one of the largest and most innovative regions of the world.”

Schauble has played a crucial role in the eurozone debt crisis, but has also supported the European Central Bank, including its bond-buying programme, similar to the US Federal Reserve’s quantitative easing.

He implied to the newspaper that it was too soon to start winding back those policies before the necessary reforms were in place.

“In recent years we have witnessed very expansionary monetary policies around the world,” he said.—AFP