IMF says Africa needs $2.5 bln bailout from economic meltdown

LAGOS, June 9 (Xinhua) --The International Monetary Fund (IMF) has predicted that the next year may witness dramatic increase in credit borrowings by African countries to the tune of 2.5 billion U.S. dollars as a result of biting effects of global economic meltdown, the Lagos based This Day newspaper reported Tuesday.

The IMF Country Chief and Resident Representative to Nigeria, David Nellor, made the disclosure while on a courtesy visit to the Minister of Labor and Productivity, Adetokunbo Kayode, in Abuja on Monday.

He singled out Nigeria as one country that has so far escaped from the immediate impact of the world financial crisis due to the accrued benefits from the fiscal reforms.

Nellor particularly pointed to the oil savings from excess crude oil account as well as the banking reforms as major contributory factors in the measure of financial stability being enjoyed by Nigeria.

"The crisis is clearly a big issue globally and each country has its own challenges and for several countries in Africa, they need finance," he said.

"If they don't have that finance, it means they will grow more slowly, so we anticipate this year a lot of borrowing will take place at concessional interest rates," he added.

He said the interest rate on IMF money borrowing to some countries is half percent.

"That is a concessional rate and we anticipate an increase this year of maybe 2 billion dollars or 2.5 billion dollars of additional borrowing from Africa to help countries tied all over during this crisis period," Nellor added.

Earlier in his welcome address, the Nigerian labor minister said Nigeria' s economic problem is not caused by the global economic crisis, but is principally based on the fact that there are inherent structural problems within the country's economy.

Kayode said what Nigeria requires from IMF at the moment is very strong beneficial support.

According to him, the World Bank did a report on the last 10 years of economic activities in Nigeria and the conclusion is that even though Nigeria has an across-the-board economic growth of between 7 and 8 percent, there is no commensurate growth in the number of the employment created.

He said his ministry had taken up the issue of rising unemployment rates and had adopted a number of policy measures aimed at redressing the situation.

"I believe IMF and all other international partners must assist us to see how we can tackle the issue of unemployment," he added.

Special Report: Global Financial Crisis

Asia likely to see economic recovery by mid-2010: IMF economist

HONG KONG, May 8 (Xinhua) -- Asia, excluding the Chinese mainland, was experiencing larger-than-expected impacts from the global financial turmoil via trade links, and was likely to see economic recovery by mid-2010, said an IMF official on Friday.

"We expect that the recovery will come for Asia, excluding China, by the middle of next year," Joshua Felman, assistant director of Asia and Pacific Department of the International Monetary Fund (IMF), said in an interview with Xinhua in Hong Kong.

Felman, who made a presentation on IMF's latest regional economic outlook report for Asia and the Pacific, said the economic situation in Asia, generally speaking, had stabilized, and things would gradually improve, although recovery would take much longer.

"China will start to rebound much more quickly. In fact, it maybe rebounding even now, because the government is spending so much money to help lift the economy," he said.

But Vivek Arora, senior resident representative of IMF in China, was quick to sound a cautious note, saying that it was still too early to make a definite judgment that the China was already on the way to a full recovery, although there had been signs that the worst might have been over.

In fact, the IMF report cautioned against over optimism and even adjusted its forecasts for the regional economy downward significantly.

The impacts from export slowdown on the Asian economies had been larger than expected, it said.

Emerging Asia, including China's Hong Kong and Taiwan, as well as South Korea, Singapore, Thailand, among others, suffered a decrease of no less than 15 percent in the fourth quarter of 2008 on a seasonally adjusted annualized basis, said the IMF report.

Moreover, the impacts were likely to carry into the next couple of years, dimming the medium economic outlook to some extent, the report argued.

Stephen Roach, chairman of Morgan Stanley Asia, said he agreed with the views of IMF, adding the situation at present for China was largely different from the export slowdowns followed by quick rebounds in 1997-1998 and 2001-2002.

The drive from export growth was likely to remain weak over the medium term and it remains to see whether domestic demand growth was sustainable, he added.

Other economists, however, disagreed with the pessimism.

Sharp export slowdowns were more likely to be followed by quick rebounds, and the short-term outlook was not that negative, said Michael Spencer, managing director, chief economist and head of global markets research Asia Pacific, Deutsche Bank.

Arora said China was now on the right way in policy directions although challenges remained as to whether the surges in domestic demands would be sustainable.

Spencer, however, said he believed China would be able to get domestic demand to work as an economic engine, although it might take a long period of time.

Spencer also cautioned against oversupply of bank lendings, which he said was likely to do more harm than good if the trend of rapid growth continues into next year.

The IMF, however, maintained it was key to keep the credit financing system at work, as the credit condition in general remained fragile.

IMF: Four Latin American states less affected by global financial crisis

Special Report: Global Financial Crisis

BOGOTA, May 7 (Xinhua) -- Colombia, Chile, Peru and Uruguay are the four Latin American countries less affected by the global financial crisis, an International Monetary Fund (IMF) official was quoted by local press as saying on Thursday.

The IMF's director for the Western Hemisphere Nicolas Eyzaguirre, who was here to present a report, said the economies in the region will take less time to recover.

Compared with big regional economies like Brazil and Mexico, the four countries can recover faster because of their smaller manufacturing sectors, which have been heavily hit by the decline in export during the global financial crisis, Eyzaguirre said.

He said in particular Colombia is a "privileged" country with a solid macro economy. The IMF forecast zero growth this year and a 1.3 percent growth in 2010 for Colombia.

IMF: Asia need to wait for sustained economic recovery

Special Report: Global Financial Crisis

SINGAPORE, May 6 (Xinhua) -- The International Monetary Fund (IMF) said here on Wednesday that a sustained economic recovery in Asia will have to wait.

The IMF has forecast that the global economy won't recover before the middle of 2010, and the economy in the whole of Asia will grow 1.3 percent this year before expanding 4.3 percent in 2010.

The IMF said that in order for Asia to return to pre-crisis growth rates, the region may need to rebalance growth away from exports and toward domestic demand.

Authorities will need to maintain foreign exchange liquidity, and where necessary draw on the IMF's new flexible credit line, which provides qualified countries with upfront assistance with no attached policy conditions, said the IMF.

Speaking at an industry event here on Wednesday, the Monetary Authority of Singapore's deputy managing director Ong Chong Tee said that the prospects for Asia in the near term remain uncertain, but adding that Asia's fundamentals remain sound, helped by financial institutions' limited exposure to troubled assets and households' higher level of savings.

Tanzania to host African finance ministers conference

Special Report:Global Financial Crisis

DAR ES SALAAM, Feb. 3 (Xinhua) -- The government of Tanzania will join the International Monetary Fund (IMF) to host a continental conference on the ongoing global financial crisis and its impact on the continent.

Taking part in the two-day conference will be finance ministers and central bank governors from African countries, according to a press statement issued by the IMF.

The conference, slated for March 10-11 in Dar es Salaam, will also draw participants from the academic circle and the private sector.

IMF Managing Director Dominique Strauss-Kahn said in the statement that the objective of the conference is to discuss the impact of the financial crisis on Africa and to learn from the continent's successful economic experiences, especially in terms of macro-economic stability and growth.

IMF deputy chief sees growth return by year end

Special Report:Global Financial
Crisis

DAVOS, SWITZERLAND, Jan. 31 (Xinhua) -- The world
economy could return to growth by the end of this year after being hit hard by
the financial crisis, a senior official of the International Monetary Fund (IMF)
said Saturday.

"We believe that with the adequate policy response
... the world economy can return to growth by the end of this year and to trend
growth in 2010," John Lipsky, first deputy managing director of IMF told
delegates at the World Economic Forum in the Swiss ski resort of Davos.

He said the IMF will need at least another 500
billion U.S. dollars to expand its capital basis as more countries may rely on
its support to tide over the economic turmoil.

Speaking at the same panel discussion, Bank of Canada
Governor Mark Carney said he was more optimistic than a IMF forecast for next
year, based on reason that the stimulus programs installed by various
governments may take effect.

The latest IMF forecast on Wednesday said the world
economic growth is projected to plummet to 0.5 percent in 2009, the lowest in 60
years, before rebounding to 3.0 percent in 2010.

French Finance Minister Christine Lagarde warned that
the world economic crisis could provoke "social unrest."

"Social unrest and protectionism are the two major
risks of the world economic crisis," she said, adding that the risks were
increased by "having to engage taxpayers' money and by hampered growth."

She urged world governments to take decisive actions
before the leaders of the Group of 20 nations (G20) are due to meet in London in
April, a follow-up to their first summit on the financial crisis in Washington
last November.

"We need to give an extremely strong signal as early
as April 2 at the G20 meeting in London to restore confidence in the system,"
she said.

Meanwhile, Carney warned that banks have so far
underestimated the commitments made by governments to calm down the financial
markets, making the bailout efforts less effective.

"They are heavily, too heavily discounting the very
clear commitment from the G7 that no systemically important institution will be
allowed to fail. That is the first line of the Oct. 8 communique which was
literally typed in by the G7 finance ministers themselves," he said, "The power
of that and the degree of commitment to that has been underestimated."

IMF head: bigger role of China in global economy legitimate

WASHINGTON, April 28 (Xinhua) -- International
Monetary Fund Managing Director Dominique Strauss-Kahn said on Tuesday that it
is legitimate for China to play "a bigger role" in the world economy.

"The crisis is certainly an opportunity to reshuffle
the IMF's governance, to see the new balance of powers in the world,"
Strauss-Kahn responded to a question raised by Xinhua.

"I do believe that it is an opportunity for China to
play a bigger role," he said, noting that it is "legitimate" for China due to
its size of economy, population and the efforts by the Chinese government to
cope with the crisis.

"I think it is good for everybody that China becomes
a more and more big player in the world economy," he stated, adding that China
will also take more responsibilities.

Meanwhile, the IMF chief said that the influence of a
member country is not simply a question of its quota.

What determines the influence of a country in the IMF
is its engagement with the Fund, including providing resources or providing
technical assistance, said Strauss-Kahn.

China's central bank governor Zhou Xiaochuan last
week urged the IMF to push forward its own reforms and said that China is
willing to explore modalities and make appropriate contributions to the IMF.

"We believe that the size of contribution should
reflect members respective rights and obligations in the Fund," said Zhou at the
International Monetary and Financial Committee (IMFC) meeting held here
Saturday.

"We must emphasize that the Fund is a quota-based
institution, and that quota increases and realignment are the basic means of
resolving the issue of the Fund's inadequate resources and are an essential
requirement to improve the Fund's governance structure," Zhou said.

China: use IMF bonds cash to fight crisis

Special Report:Global Financial Crisis

BEIJING, April 27 -- Any money raised by the sale of
bonds to the International Monetary Fund (IMF) should be used to help developing
countries, China said.

The BRIC nations, made up of Brazil, Russia, India
and China, have called on the IMF to issue the debt instrument as a temporary
measure to increase its resources.

World Bank (WB) President Robert
Zoellick (L) and International Monetary Fund (IMF) Managing Director
Dominique Strauss-Kahn attend the semi-annual session of the Joint
Development Committee of the World Bank and the International Monetary
Fund, in Washington, the U.S., on April 26, 2009. The session was convened
as the spring session of the two institutions entered its second day.
(Xinhua/Zhang Yan)
Photo
Gallery

The four countries are interested in buying the
bonds, the institution's managing director Dominique Strauss-Kahn said at the
IMF spring meeting on Saturday.

"Now we're discussing with different creditors the
way to implement it and the amount that we put in it," he said.

During the G20 summit, British Prime Minister Gordon
Brown said China was willing to pledge up to 40 billion U.S. dollars to the IMF.

While *** no mention of China's promise, Central
Bank Governor Zhou Xiaochuan said the IMF should use its increased resources to
support developing countries in their effort to cope with the financial crisis
and maintain economic development.

He added that developed countries should assume the
main responsibility for stabilizing the financial markets and reigniting
economic growth.

China has already played an active role in
stabilizing global finance and economic growth, Zhou said. Since last year,
China has signed bilateral agreements on currency swaps worth 650 billion yuan
(95 billion U.S. dollars) with South Korea, Malaysia, Belarus, Indonesia and
Argentina as well as China's Hong Kong.

China will continue its pro-active fiscal policy and
its moderately loose monetary policy to maintain momentum in the country's
stable, relatively fast growth, Zhou said.

Brazil's Finance Minister Guido Mantega was quoted by
Dow Jones as saying that the bond should have a relatively short maturity of
around one year, should yield more than U.S. Treasury notes, should qualify as
government reserves and should be tradable on the secondary market.

Mantega said emerging markets that need the money
most should benefit from the new securities the IMF is considering issuing.

Also on Saturday, Zhou stressed the IMF should push
for reforms of special drawing rights - an international reserve asset created
by the IMF to supplement reserves of member countries.

The World Bank and IMF spring conference began on
Friday with a meeting of the Group of 7 wealthy nations - the U.S., Japan,
Germany, France, Britain, Italy and Canada - and was followed with a dinner
meeting of the Group of 20 countries, which include the seven wealthy nations
plus the major emerging markets such as China, Russia and Brazil. The conference
ended yesterday.

(Source: China Daily)

IMF says financial losses may swell to $4 trln

Special Report:Global Financial Crisis

WASHINGTON, April 21 (Xinhua) -- The International Monetary Fund (IMF) said Tuesday that losses stemming from the U.S. mortgage crisis may approach 4 trillion dollars, saying the global financial system "remains under severe stress."

The IMF said in January that it expected the deterioration in U.S.-originated assets to reach 2.2 trillion dollars by the end of next year.

But the Washington-based lender said in a semi-annual report, the Global Financial Stability Report (GFSR), that its best estimate of write-down on U.S.-originated assets to be suffered by all holders will be 2.7 trillion dollars, "largely as a result of the worsening base-case scenario for economic growth."

"In this GFSR, estimates for write-downs have been extended to include other mature market-originated assets and, while the information underpinning these scenarios is more uncertain, such estimates suggest write-downs could reach a total of around 4 trillion dollars, about two-thirds of which would be incurred by banks," said the IMF.

The IMF report followed a global plunge in stocks Monday, when U.S. stocks slid more than 3 percent after a six-week winning streak, which was the longest for the SP 500 since 2007 and led to the biggest gain over the period for the Dow Jones since 1938.

The report warned the global financial system remains under severe stress as the crisis broadens to include households, corporations, and the banking sectors in both advanced and emerging market countries.

"Shrinking economic activity has put further pressure on banks' balance sheets as asset values continue to degrade, threatening their capital adequacy and further discouraging fresh lending," said the report.

"Thus, credit growth is slowing, and even turning negative, adding even more downward pressure on economic activity," it said." Substantial private sector adjustment and public support packages are already being implemented and are contributing to some early signs of stabilization."

The report called for decisive actions to restore confidence in the global financial system.

"Further decisive and effective policy actions and international coordination are needed to sustain this improvement, to restore public confidence in financial institutions, and to normalize conditions in markets," said the report.

The key challenge is to break the downward spiral between the financial system and the global economy, said the IMF, noting that promising efforts are already under way for the redesign of the global financial system "that should provide a more stable and resilient platform for sustained economic growth."

IMF chief: recovery could emerge in 2010

Special Report:Global Financial Crisis

WASHINGTON, April 16 (Xinhua) -- The global recession
may be ending and a recovery could emerge next year, Managing Director of the
International Monetary Fund (IMF) Dominique Strauss-Kahn said here on Thursday.

"The freefall in the global economy may be starting
to abate, with a recovery emerging in 2010," said Strauss-Kahn in a speech at
the National Press Club.

But "this depends crucially on the right policies
being adopted today," he noted.

He urged all countries to act together and
immediately adopt policies aimed at ending the recession.

"Of course, the solutions differ by country, but
there must be a coherent and coordinated response by the international
community," said the chief of the 185-member IMF.

Strauss-Kahn said "2009 will almost certainly be an
awful year -- we expect global growth to enter deeply negative territory."

"It originated in advanced economies, and spread like
wildfire across the world," he said. "This is a truly global crisis, and nobody
is escaping."

At the G-20 summit earlier this month in London,
leaders from rich countries and emerging market nations focused on urgent
actions needed to restore growth and on what must be done to repair some of the
underlying problems that caused the world crisis.

Strauss-Kahn said he was happy the G-20 leaders had
made progress on "three urgent priorities" -- the financial sector reform,
fiscal stimulus, and financial support.

To fix the financial sector is essential to get the
global economy moving again, he said. "Until this is done, attempts to restore
demand are likely to falter."

The IMF has been recommending, as early as January
2008, a 2 percent of GDP discretionary loosening for countries that have the
fiscal space to do so, according to the chief.

"Countries have largely delivered in 2009," he said.
"But efforts need to be sustained in 2010, because we are not out of the woods
just yet."

He also stressed that urgent actions should be taken
on the financing front, "especially to alleviate pressures on emerging markets,
to help them overcome the economic and social costs of the crisis."

"This is the area where the G-20 was boldest,
agreeing to triple the IMF's lending capacity to an unprecedented 750 billion
dollars," and "to at least double its concessional resources for lending to
low-income countries."

"We now have the resources to make a difference,"
said Strauss-Kahn.

The chief's remarks on the current global crisis came
a few days before the IMF holds its spring meetings with the World Bank on April
25-26 in Washington.