IMF initiates emergency plan but sees recovery

09 October 2008 17:55  [Source: ICIS news]

WASHINGTON (ICIS news)--The International Monetary Fund (IMF) has activated emergency procedures to respond quickly to countries that need help during what the IMF director said on Thursday is a globalised economic crisis.

 

IMF Managing Director Dominique Strauss-Kahn told a press conference that the fund’s emergency procedures, created in 1995, will allow the IMF to respond “within two weeks at most” to any nation’s request for help.

 

Strauss-Kahn said the IMF’s emergency procedures were being reactivated “to answer problems that may happen in some emerging economies”.

 

He did not name any emerging economies that may be facing a financial crisis, but he said that “emerging economies have become affected by the situation”.  He said those economies in particular have been affected by cuts in lines of credit.

 

Strauss-Kahn said the world’s economies are experiencing what he termed “financial global warming” that began with financial stresses in advanced economies in 2007 and “became overwhelming in 2008”.

 

“Now the crisis is really globalised, and this has a lot of implications for countries’ policies,” he said.

 

He said that the first priority is to restore confidence in global financial systems, and he urged coordinated action among national governments. 

 

Strauss-Kahn particularly called on EU nations to work together. He cited cooperation and coordination among nations in engineering the multi-national interest rate reductions announced on Wednesday, but he said that otherwise “cooperation is less evident”.

 

He said the fund’s emergency procedures “allow the IMF to respond quickly, and we are ready to answer any demand by countries”.

 

In particular, he said the IMF is ready “to answer problems that may happen in some emerging economies”.

 

The IMF director said the emergency procedures simply allow the fund’s board of directors to act much more quickly to a given nation’s request for help.  “In this situation, we will not discuss things for weeks and weeks; we will act in two weeks at most,” he said.

 

While Strauss-Kahn said that the financial crisis is very serious and has not previously been seen in such global scope, “we can solve this problem if we act quickly, forcefully and cooperatively”.

 

Despite the dire situation of the global economy, he said the IMF still expects a recovery late next year.

 

“This crisis is serious and protracted, but at the end of 2009 we see the beginning of a recovery,” Strauss-Kahn said.

 

“We see the beginning of a recovery in the second half of 2009; it will be a very slow recovery but it will be a recovery,” he added.

 

He said that economic growth in 2009 will be limited chiefly to emerging economies with advanced nations experiencing little or no growth for the year.  However, he said, the global economy as a whole should see 3% growth next year.

 

To discuss how the financial crisis is affecting the chemicals industry, visit this thread on ICIS connect

By: Joe Kamalick
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