Page last updated at 02:25 GMT, Monday, 17 November 2008

IMF head calls for extra funding

Dominique Strauss-Kahn speaks at the IMF in Washington (15 November 2008)
Mr Strauss-Kahn said the G20 was aware of the need for a strong IMF

The head of the International Monetary Fund says it will need more funding if it is to play a bigger role in aiding a global economic recovery.

Dominique Strauss-Kahn told the BBC that the IMF was likely to need at least $100bn (68bn) of extra funding over the course of the next six months.

Mr Strauss-Kahn also called on states to continue cutting interest rates.

His comments came as the Japanese economy officially entered a recession, shrinking 0.1% in the third quarter.

This follows a 0.9% contraction in the world's second-biggest economy in the previous quarter from April to June.

On Saturday, G20 leaders agreed at a summit in Washington to co-operate closely to stimulate worldwide economic growth, with both developed and developing countries working to cut taxes and interest rates, and increase government spending.

Finance ministers were also asked to discuss the longer-term reform of financial regulation, including executive pay and risky lending.

Their proposals will be discussed at a follow-up summit in April.

'Safety net'

The weekend's G20 meeting brought together leading industrial powers, such as the US, Japan and Germany, and emerging market countries like China, India, Argentina, Brazil and others - representing 85% of the world's economy and two-thirds of its population.

The number of countries having problems at the same time has dramatically increased and they come to the IMF asking for support
Dominique Strauss-Kahn
Managing Director, International Monetary Fund

The communique issued after the summit stressed the International Monetary Fund's "important role in crisis response", welcomed its new short-term liquidity facility, and urged the ongoing review of its instruments and facilities to ensure flexibility.

The BBC's Andrew Walker says the organisation does have substantial resources to lend to countries needing help to weather the economic storms.

Before the summit the figure was $250bn, and then Japan made a commitment to provide another $100bn, our correspondent says.

But in an interview with the BBC, the IMF's managing director said that although it did have money enough for the immediate future, it was likely to need more.

"The number of countries having problems at the same time has dramatically increased and they come to the IMF asking for support," Mr Strauss-Kahn said. "So we need more resources."

Leaders attend the G20 summit in Washington
G20 leaders have pledged to work together to restore global growth

He described the Japanese prime minister's offer on Friday as a "huge step forward", saying it meant the IMF now had "enough resources to address the problem we are facing today".

"The question is to be able to face the problem in six months from now, and I think all the heads of state and government are aware of the need for a strong IMF," he warned.

Mr Strauss-Kahn said the organisation would probably need around $100bn in additional funding in order to cope with increased demand.

The IMF, he added, would seek to provide "some sort of safety net to protect the most vulnerable part of the population from the consequences of the adjustment".

Rate cuts

The former French finance minister also called on countries to tackle the economic crisis themselves by cutting interest rates and using government finances.

I think now [the ECB has] room to decrease the interest rate, but nevertheless the stress has to be put on fiscal policy
Dominique Strauss-Kahn

He said the European Central Bank (ECB) had room for another rate cut.

"In some parts of the world - Japan, the United States - interest rates have been cut very much, but it can be done more aggressively in other parts," he said.

"I think now [the ECB has] room to decrease the interest rate, but nevertheless the stress has to be put on fiscal policy," he added.

Our correspondent says Mr Strauss-Kahn's comments were not an explicit call for action, but they suggested at the very least that he would glad if the ECB cut rates again soon.

Critics have said the bank has been too slow to reduce interest rates, in sharp contrast to, for example, the US Federal Reserve.

Print Sponsor


RELATED INTERNET LINKS
The BBC is not responsible for the content of external internet sites


FEATURES, VIEWS, ANALYSIS
Has China's housing bubble burst?
How the world's oldest clove tree defied an empire
Why Royal Ballet principal Sergei Polunin quit

BBC iD

Sign in

BBC navigation

Copyright © 2019 BBC. The BBC is not responsible for the content of external sites. Read more.

This page is best viewed in an up-to-date web browser with style sheets (CSS) enabled. While you will be able to view the content of this page in your current browser, you will not be able to get the full visual experience. Please consider upgrading your browser software or enabling style sheets (CSS) if you are able to do so.

Americas Africa Europe Middle East South Asia Asia Pacific