IMF Calls for Coordinated Action in Solving the Current Crisis

International Monetary Fund [IMF] Managing Director, Dominique Strauss-Kahn, said today that problems in the financial markets and in the global economy can be solved “if we act quickly, forcefully, and cooperatively.”

At a press briefing, ahead of the IMF-World Bank Annual Meetings Oct. 13, which will be held in the U.S capital, IMF chief said that global financial crisis had been marked by important regulatory and supervisory failures. He stressed that economic and financial authorities must discuss at the Washington meeting – possible further steps to solve the crisis. The world, stated Mr. Strauss-Kahn, is on “the cusp of a global recession,” but if countries act together, the world economy would recover.

Mr. Strauss-Kahn then directed his attention toward the emerging market economies. He noted how severely the emerging economies had been affected by the crisis as trade was hit by slowing growth in advanced economies and as credit lines were cut. However, IMF chief pointed out that while the current crisis is serious and protracted, a slow recovery will most likely begin in the second half of fiscal ’09.

IMF also announced the activation of an emergency funding scheme, mainly aimed at emerging market nations and poor countries that have plunged into economic strains. The facility, ordered by Dominique Strauss-Kahn, is structured as a quick response to provide financial aid to countries in distress. The IMF chief said the facility could make “hundreds of millions of dollars” available, if needed, to try to contain damage from the crisis. “We are ready to answer any demand by countries facing problems”, he added.

The IMF chief stressed again the fact that a quick and forceful action could still end the crisis. He said the main objective for ministers and officials meeting in the US capital remains that of restoring confidence and stability in global markets, and that policymakers should not wait until the end of the current crisis before acting.

Mr. Strauss-Kahn concluded by saying that unilateral actions should be avoided and action should be coordinated at the global level and at regional level, as with the recent coordinated central bank action on interest rates.