IMF speeds emergency loans for cash-strapped governmentsOctober 30th, 2008 - 8:39 am ICT by IANS
Washington, Oct 30 (DPA) The International Monetary Fund (IMF) Wednesday approved a new programme to provide emergency loans to countries facing serious cash shortages in the wake of the ongoing financial crisis.Countries with a “track record” of solid economic policies can now apply for three-month loans without the usual conditions attached, IMF Managing Director Dominique Strauss-Kahn said.
Typical IMF loans are linked to often-strict policy requirements, such as privatising industries or reducing subsidies. Countries with shaky economic pasts, such as Argentina, would not be eligible for the new loans, Strauss-Kahn said.
He said that “some” countries had already expressed interest in the so-called Short-Term Lending Facility, which was approved by the IMF’s 24-member Executive Board.
The IMF has faced pressure to step up its efforts to help struggling countries that are struggling with a credit crisis that has moved well beyond developed economies.
World Bank President Robert Zoellick earlier this month said that about 30 countries could be facing balance of payment problems.
To date, the IMF has been operating on an ad-hoc basis, providing emergency loans to Iceland, Ukraine and Hungary, where governments have all faced serious cash shortfalls. The new programme fills a “gap in the fund’s tool kit of financial support,” Strauss-Kahn said.
About $200 billion are available in total, and countries can borrow up to five times what they put into the 185-country institution. Strauss-Kahn would not say how much he expected the fund to pay out, but the board will meet for a review if the programme tops $100 billion.
Strauss-Kahn acknowledged that the IMF could need a cash infusion of its own, to help the Washington-based crisis lender dole out aid amid the financial turmoil. British Prime Minister Gordon Brown called this week on emerging economies like China to meet the shortfall.
Tags: british prime minister gordon brown, dominique strauss kahn, financial turmoil, imf loans, international monetary fund, international monetary fund imf, member executive board, prime minister gordon brown, robert zoellick, world bank president