Page last updated at 18:01 GMT, Thursday, 19 February 2009

IMF expects more requests for aid

Dominique Strauss-Kahn says more countries will need IMF help

The head of the International Monetary Fund has told the BBC that he expects more countries to request financial aid to survive the global slowdown.

Iceland, Hungary and Ukraine were forced last year to appeal to the organisation for aid.

IMF chief Dominique Strauss-Kahn has warned that a second round of nations will be forced to seek IMF cash.

Separately, Germany's finance minister said Germany might consider bailing out smaller European nations.

Germany's Finance Minister Peer Steinbrueck described the suggestion that the eurozone could fall apart as "totally absurd" and promised that if other member states got into trouble, "we will show ourselves to be capable of acting".

Mr Steinbrueck's comments strengthened the euro against the dollar. One euro was worth $1.2760 by late afternoon from $1.2511 on Wednesday.

Mr Strauss-Kahn said that the crisis was "far from over".

"There's a real possibility that in the coming weeks or months another couple, or maybe more than that, countries will need some support, especially emerging countries," said Mr Strauss-Kahn.

He did not specify which countries might ask for help.

'Early warning'

Mr Strauss-Kahn also said that the IMF was among the institutions which gave an "early warning" about the upcoming crisis "two or three years ago".

"[But] because when you are a head of a government or a finance minister and the sky is still blue, and you have a guy coming from the outside telling you: 'The sky is blue, but what is going to happen in one year is terrible', you say: 'OK, lets wait for one year'. It's absolutely understandable," he said.

Mr Strauss-Kahn said there was a need for stronger multilateral institutions, with more legitimacy.

European measures

Given the risks facing the Eastern European economies, if Berlin does decide to support them, that will weigh on [Germany's] finances
Yuji Saito, Societe Generale

Many Eastern European countries have been in trouble in recent months amid the global financial and economic crisis, as their economies plummeted from boom to bust.

German Chancellor Angela Merkel met EU Commission President Jose Manuel Barroso amid speculation that Germany may announce measures to help some other European economies.

But she declined to comment specifially on the matter saying after the meeting: "The eurozone has, in fact, proven its worth in this financial crisis."

Debating currency

Poland's finance minister said his country was considering adopting the single currency to help weather the downturn.

"Secure public finances and a quick adoption of the euro are the best way out of the crisis for Poland," Jacek Rostowski told members of parliament.

However, central bank head Slawomir Skrzypek said on Wednesday that Poland was not ready to set out on the path to the eurozone.

He cited the weakness of the zloty, which has dropped more than 12% against the euro since the beginning of the year.

Many Eastern European financial markets have been hit hard amid worsening economic data and an exodus of foreign investors.



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