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(CEP News) Frankfurt - The International Montary Funds may need up to $150 billion in additional funds to assist emerging markets and poorer countries suffering through the intensifying global economic slump, IMF Managing Director Dominique Strauss-Kahn said.
In an interview in Washington published on Monday, Strauss-Kahn also said that the IMF will have to make a "significant" upward revision to how much the global crisis will cost in terms of writedowns and losses. Currently, projections point to writedowns and losses in the neighbourhood of $1.4 trillion. "If in six months from now the crisis has worsened and many other of our members need our help, the demand may be above what we have," Strauss-Kahn said during the interview, conducted on Jan 9. "If the political decision is made to do something, I'm convinced that it will not be difficult to find the extra $150 billion," Strauss-Kahn said. The extra $150 billion would push the IMF's resources to $500 billion, double the IMF's current funds compared to the same period one year ago. The IMF head also said that its growth projections may need to be revised down. In late 2008, the IMF forecast the global economy to manage a growth rate of 2.2% in 2009, with the euro zone economy expected to shrink by 0.5%, the U.S. to contract 0.7%, and Japan to decline by 0.2%. Focusing on the euro zone, Strauss-Kahn also said that European states are "behind the curve" regarding stimulus packages and their implementation, adding that governments are underestimating how much such measures are needed to help economies recover. Strauss-Kahn also said that he expects the European Central Bank to lower rates further in the coming months, but hesitated in suggesting what other measures may be needed to help bring the economy out of its current recession. "Rates in Europe will probably go down in coming months," Strauss-Kahn said. "A decrease in interest rates is welcome but the impact will not be very important." Written by CEP News European Staff in Frankfurt,
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, edited by Nancy Girgis,
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