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UPDATE: IMF Strauss-Kahn:Progress Made On Tax On Financial Sector

(Adds quotes, details.)

By Nicholas Winning

Of DOW JONES NEWSWIRES

ST. ANDREWS, Scotland -(Dow Jones)- International Monetary Fund Managing Director Dominique Strauss-Kahn said Saturday that progress is being made on studying a possible tax on the financial sector, a so-called IMF tax.

He said technical work on the tax is ongoing and the fund will try to have it ready by its April meeting. However, he said progress will also depend on whether there is political support for the initiative.

"The decision will be made by the heads of state in June, in my view, but to make a decision in June...you have several steps before, including the ministerial meeting in April at the same time as the spring meeting," Strauss- Kahn said.

Strauss-Kahn said the idea is to have a tax which would be an incentive to take less risks, but also create an insurance fund to be used in case of a future crisis.

"The point here is to recognize that the financial sector is a more risky sector than the rest of the economy," he said.

Strauss-Kahn said there is also a need to find a tradeoff between countries, particularly in Europe, that are in favor of more constraints on the financial sector, and others, like the U.S., in favor of less regulation.

The IMF head said the fund is also close to establishing a framework for discussion among the Group of 20 leading economies to analyze their different economic policies for the future and offer policy advice.

"So it's a broad exercise of global consistency, which in my view will be the main job of the G20 after the crisis," he said.

Strauss-Kahn said to prevent another crisis it is necessary to know how countries' different economic policies conflict with each other or complement each other.

"The first exercise will certainly have to do of course with exit strategies [ from economic stimulus measures]," he said, adding that such withdrawal will take place at different times in different countries.

Strauss-Kahn also said he had met with the Argentine finance minister during the G20 summit, but declined to comment on the discussions.

-By Nicholas Winning, Dow Jones Newswires, +44 207 842 9498; nick.winning@ dowjones.com

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  11-07-091249ET
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