Emerging economies will need bailout: IMF chiefFebruary 19th, 2009 - 9:18 pm ICT by IANS
London, Feb 19 (IANS) The head of the International Monetary Fund (IMF) has warned that at least two more countries - emerging economies - will need to be rescued financially in the near future but refused to name them.
“I’m afraid that there is a possibility that in the coming weeks and months another couple, maybe more than that, countries will need some support, especially emerging countries,” Dominique Strauss-Kahn said in an interview with BBC Newsnight Wednesday, after talks with British premier Gordon Brown.
“Most of the emerging countries have been living during the last decade relying on a large inflow of capital from abroad. The problem is that with the crisis and the repatriation of capital by most western banks and private investors, the flows are just drying up and they need support,” he added.
The IMF chief refused to name the countries, saying he was in talks with them, but his warning follows calls by World Bank President Robert Zoellick and Prime Minister Brown for greater support to Eastern European economies that have been hit by capital flight.
Montek Singh Ahluwalia, the deputy chairman of India’s Planning Commission, said last month that a sum of $300 billion had left developing countries in the wake of the financial crisis.
Strauss-Kahn said that although the IMF had enough funds to help out countries that were currently needing its help more would be needed for a second wave of applicants.
“I really think that the G-20 [Group of 20] will give the IMF the resources and also ask the IMF questions to deal with which will really broaden our scope,” Strauss-Kahn said.
Leaders of the G-20, composed of developed countries and major emerging economies, are set to meet in London April 2 to discuss an action plan to confront the financial crisis.