WASHINGTON. Oct 9: Simmering tension between the World Bank and the IMF burst into the open at their Just-concluded annual meeting here, disclosing a struggle to strike a balance between fighting poverty and stabilising financial markets, reports AFP.

The friction became apparent in a remarkably trank speech by Bank President James Wolfensohn. who told world finance officials it was now time "to go beyond financial stabilisation" to engage in a debate "where mathematics will not dominate humanity, where the need for often drastic change can be balanced with protecting the interests of the poor." _

Evoking dark, searing Images of desperation" in erisishit Asia. Wolfensohn's address stood in stark contrast to the numbingly bland pronouncements by most of the delegates here.

The International Monetary Fund's focus on macroeconomic issues, such as exchange rates, capital flows and monetary policy. must come at the expense of social development in countries where the two institutions work side by side, he said.

The dissension alluded to by Wolfensohn mirrors a sharp debate among private development economists, where the Fund has been faulted for its insistence on promoting high interest rates as a means of shoring up national currencies and stemming the outflow of investment.

Such an approach, according to IMF critics such as Paul Krugman of the Massachusetts Institute of Technology, imposes a sharp contraction in economic activity and plunges local populations into poverty.

IMF officials insist that

tight credit policies are only a temporary measure and are critical to efforts to persuade panicky foreign investors to keep their money in place.

In his remarks Monday Wolfensohn appeared to be siding with those who contend that IMF conditions imposed on countries receiving its assistance should be less severe and more conducive to economic growth.

The World Bank chief at a closing press conference sought to minimise the dispute, saying: "I believe we have complete understanding with the Fund that financial and macroeconomic policies have to take into account social and human issues." "The differences between us have been a little overdone."

But he acknowledged that "we do have differences from time to time on the amount of money that should go into social programmes.

"We are in full accord on the objectives. It's Just a matter of degree."

In his closing remarks to the gathering, IMF Managing -Director Michel Camdessus also tried to lower the rhetorical tone.

"We in the Fund are acutely aware that this crisis has profound developmental implications and social costs... 1 agree entirely with Jim Wolfensohn's eloquent portrayal of the plight of the people...."

Both the Bank and the Fund were the targets of blunt remarks from some of the ministers in attendance here, notably US Treasury Secretary Robert Rubin.

"It is past time to put aside institutional rivalries unbefitting public institutions with the same shareholders." he told a meeting of the IMF's policy-setting interim committee.