Thursday, February 19, 2009

IMF expects more requests for aid

IMF expects more requests for aid
The head of the International Monetary Fund has told the BBC that it expects more countries to request financial aid to survive the global slowdown.

Iceland, Hungary and Ukraine were forced last year to appeal to the organisation for aid.

IMF chief Dominique Strauss-Kahn has warned of a second round of nations that will be pushed to the brink of bankruptcy and seek IMF cash.

Mr Strauss-Kahn said that the crisis was "far from over".

"There's a real possibility that in the coming weeks or months another couple, or maybe more than that, countries will need some support, especially emerging countries," said Mr Strauss-Kahn.

He did not specify which countries might ask for help.

'Early warning'

Mr Strauss-Kahn also said that the IMF was among the institutions which gave an "early warning" about the upcoming crisis "two or three years ago".

"[But] because when you are a head of a government or a finance minister and the sky is still blue, and you have a guy coming from the outside telling you: 'The sky is blue, but what is going to happen in one year is terrible', you say: 'OK, lets wait for one year'. It's absolutely understandable," he said.

Mr Strauss-Kahn said there was a need for stronger multilateral institutions, with more legitimacy.

European measures

“ Given the risks facing the Eastern European economies, if Berlin does decide to support them, that will weigh on [Germany's] finances ”
Yuji Saito, Societe Generale
Many Eastern European countries have been in trouble in recent months amid the global financial and economic crisis, as their economies plummeted from boom to bust.

German Chancellor Angela Merkel will meet EU Commission President Jose Manuel Barroso amid speculations that Germany may announce measures to help some other European economies.

"I think Merkel will announce something positive, which may be a factor to support the euro," said Societe Generale chief forex strategist Yuji Saito.

"However, given the risks facing the Eastern European economies, if Berlin does decide to support them, that will weigh on [Germany's] finances. There is no silver bullet."

Story from BBC NEWS:

Published: 2009/02/19 11:51:42 GMT

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