He admitted that the institution had "made mistakes" as the Asian Financial crisis unfolded in 1997, but said it had corrected these errors within months and Asia's recovery had been spectacular. "As we re examine the role of the fund, we must not underestimate what is our bread and butter," Fischer told a rare news conference.

"Crisis lending is a critical part of what we do, but it is far from being the only thing we do, far from being the main thing we do. Instead of reform of the IMF in the years ahead we must remember the plain fact that the IMF is there to promote good policies...and should be able to continue to do so."But Fischer stopped short of complaining directly about the U.S. Proposals, which were outlined in a keynote speech from Treasury Secretary Lawrence Summers last month.

Summers said the IMF should be a last resort for borrowers,which should tap private markets before turning to public lenders. He urged the fund to raise the interest rates it charges for loans and concentrate on lending to countries which needed short-term balance-of-payments support. Fischer said the IMF also had an important role in technical assistance and surveillance, which includes annual economic review of member countries and broader assessments of economic policies around the world. IMF Financial support for a country "helps provide a signal to investors that countries are adopting policies that deserve our support," Fischer said. He added: "The fund is possibly the most important way that the international community promotes good macro policies around the world."

The IMF came under intense fire at the start of the Asian crisis, amid complaints that its policy prescriptions of high interest rates, severe spending curbs and its demands for painful structural reforms were making Asia's problems worse. "We made some mistakes, particularly early in the Asian crisis...in advising fiscal tightening when, given the lack of demand from any other source as the crisis worsened, it was necessary to have fiscal easing," Fischer said. "But it took just a few months to correct that. The basic approach of the IMF to defend currencies, to make sure that budgets did not get wildly out of control and for the first time to include the structural element of banking sector and corporate debt restructuring at the centre was correct." Fischer said the world economy looked far healthier todayt han it did one or two years ago.

"We are in a situation where the prospects for most of the emerging markets look quite good," he said, singling Asia, Brazil and Russia for their stronger-than-expected recoveries.

But in the first hint of disagreement with the new Russian administration of acting President Vladimir Putin, Fischer admitted the IMF did not like new plans that oblige exporters to swap 100 percent of their export earnings for roubles.

"We have to recognise that capital flight is a huge issuefor Russia, and we have supported a variety of measures to deal with it," Fischer said. "But the 100 percent surrender (of export earnings) is not one of them."