"Crisis Prompts Calls to Boost IMF Reserves"

Source: Annys Shin, The Washington Post, February 24, 2009.

I quote extensively:

Since last fall, the IMF has lent more than $30 billion to Hungary, Belarus, Latvia, Serbia and Ukraine. All have been hurt by collapsing demand for exports; foreign investors who have pulled back sharply, partly to cover losses at home; and falling currency values. And some may be coming back for more.....

Additional countries are expected to turn to the IMF for help as the crisis deepens, raising concerns about the fund's adequacy.

IMF officials said there isn't reason to worry -- yet. At this stage, IMF officials said, doubling the fund's lending capacity, which stood at $250 billion before the crisis, to $500 billion is sufficient to ensure confidence in the adequacy of the Fund's resources.......

But several analysts doubted that that would be enough if the global downturn lasts well into 2010, as expected........

But coming up with additional money for the IMF poses challenges. Countries such as China and the oil-rich Gulf states, which have the resources to contribute, have been reluctant to do so because they have little decision-making power under rules that favor Europe and the United States, which set up the IMF in 1945.

Comment: This is another sign that there is going to be change in the international balance of economic power with China joining the ranks of the powerful and the United States losing some of the relative power it enjoyed in recent decades.

The report is also an indicator of the economic problems yet to come! JAD