IMF may need another $15ob to counter crisis

Washington: The International Monetary Fund (IMF) may need another $150 billion (Dh550.8 billion) to help counter the hit to emerging markets and poorer countries from a worsening global economic downturn, managing director Dominique Strauss-Kahn said.

The IMF chief, in an interview in Washington, also chided European leaders for failing to grasp the depth of the coming slump in their region, creating the risk of social upheaval. The fund will make a "significant" increase in its $1.4 trillion projection of global financial losses and writedowns, he added.

The remarks by Strauss-Kahn, a former French finance minister and presidential contender, may help build momentum for proposed stimulus packages in Germany and France. They also indicate that the fund may put pressure on nations with large foreign-exchange reserves, such as China and Saudi Arabia, to step up contributions.

"If in six months from now the crisis has worsened and many other of our members need our help, the demand may be above what we have," Strauss-Kahn said in the January 9 interview in his office. "If the political decision is made to do something, I'm convinced that it will not be difficult to find the extra $150 billion" that would double the lender's resources compared with a year ago, to a total of $500 billion, he said. He warned there will be "some decrease" in the IMF's economic forecasts. In November, the fund predicted global growth of 2.2 per cent this year, with US GDP shrinking by 0.7 per cent, Japan's by 0.2 per cent and the euro area's by 0.5 per cent.

Strauss-Kahn, 59, has already overseen the steepest jump in fund commitments in its six-decade history. The IMF agreed to lend $41.8 billion to troubled economies in November, its largest monthly pledge on record.

Bloomberg News