IMF offers emergency help amid credit crunch
Posted: 10 October 2008 0842 hrs

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WASHINGTON: The International Monetary Fund has reactivated an emergency aid process for countries seeking help in the global financial crisis, IMF chief Dominique Strauss-Kahn said Thursday.

"I have yesterday (Wednesday) activated emergency procedures of the IMF to respond quickly with high-access financial programmes based on streamlined conditionality which is focused on the crisis-response priority," Strauss-Kahn said at a news conference.

The IMF managing director explained he took the step "to answer problems that may happen in some of the emerging countries" after the worst financial crisis since the 1930s Great Depression has led to "the cusp of a global recession."

"We are ready to answer any demand by countries facing problems," he added.

The emergency procedure, developed in 1995, allows up-front payments from the IMF under streamlined conditionality.

Traditionally, the IMF discussions with countries to define a programme take weeks or months.

The IMF said it had used the crisis process six times: in 1997 for Indonesia, Thailand, South Korea and the Philippines; in 2001 for Turkey; and this year for Georgia.

"There is no way to finance the situation without a programme defining the macroeconomic policy to be followed, but that has to be done very quickly" in an emergency situation, he said.

"Very quickly means two weeks at most."

In response to a question about the possibility of one of the IMF's rich member nations asking for a loan, Strauss-Kahn said: "Nobody knows if some developed economies, advanced economies will not also be in need of some help by the IMF."

Strauss-Kahn said the IMF had sufficient resources to support the needs of its 185 members.

"If these resources were all used and there was a need to increase resources, we have a different way, we know a different procedure to increase the resources of the Fund, but at the point where we are now, it is not necessary," he said.

The IMF has seen its coffers drained in recent years as countries that once relied on IMF rescue packages later spurned its conditional loans in favour of the easy credit available in a booming global economy.

- AFP/yb