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Sunday, September 13, 1998 Published at 16:26 GMT 17:26 UK


Business: The Economy

IMF cash crisis

The IMF's coffers are in urgent need of a cash injection

The International Monetary Fund has been left strapped for cash after lending record amounts to countries facing economic and financial turmoil.

Presenting the organisation's annual report, Deputy Director Stanley Fischer said reserves have sunk to historically low levels.

Only $5bn-$9bn are left in its regular reserve fund.

The last year saw member countries borrow $26bn - almost four times the amount lent in the previous year.

Mr Fischer said the organisation would consider using some of the money left for future loans but only if it knew that more resources would be available soon from the United States and other members.


[ image: Stanley Fischer:
Stanley Fischer: "A functioning IMF essential"
"Demands on our resources are not declining...everyone knows the fund's role in Latin America is at issue," he said.

There are fears that Latin American markets could be on the brink of financial turmoil like that seen in Asia and Russia.

But Mr Fischer said no Latin American nation had, so far, requested IMF funds.

He said the IMF's commitments and possible future financial emergencies in other countries made it even more urgent for the US Congress to approve additional funding as quickly as possible.

"The international financial system needs a functioning IMF," he added.

US debates extra funds

President Clinton's administration has requested an extra $18bn for the IMF - $14.5bn as an increase in the US contribution and $3.5bn to boost the emergency fund.

Last week the US Senate approved the request in full, but a House panel would only authorise the money for the emergency fund.

The administration hopes negotiations between the House and Senate will lead to the full amount being approved.

Increases in the IMF's regular reserves and the emergency fund cannot be adopted without the approval of the United States, which is the largest contributor.

Mr Fischer said it was be premature to speculate on what would happen if Congress failed to support the IMF.

He said the IMF's substantial gold reserves could not be used because they assured members of the organisation's financial viability

He also said that the IMF could not borrow funds from international financial markets because it would mark a fundamental change in the way the fund has operated since it was created 53 years ago.

The report was published ahead of the annual meetings of the IMF and the World Bank on September 30.

Mr Fischer said the meetings would focus on strengthening the international financial system based the experiences gained from the Asian and Russian experiences.



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