By Heather Scott

WASHINGTON (MNI) - The International Monetary Fund will provide oversight and surveillance of economic and financial policy reform efforts in the Group of 20 nations largely at the epicenter of the world's financial crisis, the fund said Friday.

In a report outlining the initial procedures for the oversight requested by the G20 leaders at the Pittsburgh summit, the IMF said the process will focus on "assessing and monitoring whether or not individual countries' policies and plans are collectively consistent with the G-20's main objective of restoring high, sustainable and balanced global growth."

The fund also will identify policy gaps and suggest alternatives where necessary.

G20 leaders called for the IMF oversight amid concerns individual country action, without coordination among the main economies, could exacerbate and prolong the crisis due to unintended cross-border consequences.

The IMF will provide three reports this year, the first at the Spring meeting of the IMF in Washington, which will include "the Fund staff's forward-looking assessment (next 3-5 years) of global economic prospects conditional upon G-20 national policy frameworks and plans, and indicate any policy issues or gaps, and possibly proposals for alternative policy scenarios that the G-20 members could explore."

The staff would then "provide more concrete analysis of how medium-term global prospects could be enhanced through collective policy actions" which the G-20 deputies would use to "develop a menu of policy options for consideration by G-20 Finance Ministers and Central Bank Governors and subsequently by Leaders at their June 2010 summit."

The final policy assessment would be prepared in time for the leaders summit in November, after which the IMF surveillance is expected to be an annual exercise.

The IMF stressed that while this G20 oversight is separate from the regular country and multilateral surveillance efforts -- including the annual Article IV reviews of individual economies -- it will give "more traction" to that process.

The G20 process also will feed into the IMF's regular World Economic Outlook and Global Financial Stability reports which are updated quarterly.

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