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Jan 28, 2009
Resources could be used up
BERLIN - THE head of the International Monetary Fund warned on Wednesday a 'large part' of its resources could be used up this year if it has to bail out more countries left struggling by the financial crisis.

Dominique Strauss-Kahn also warned that differences between individual eurozone economies threaten to tear the 16-country zone apart, German weekly Die Zeit cited him as saying in an interview to be published in full Thursday.

'Some countries are already queueing up outside our door. At the moment we have enough money. But if it turns out that we really have to help them, then a large part of our resources will be used up in six to eight months,' he said.

The IMF has so far given emergency bailouts to Iceland, Ukraine and Hungary.

With the global economy heading for its worst slowdown in months, Mr Strauss-Kahn said that not all countries were able to afford large stimulus programmes needed to boost their sagging economies.

'There are countries whose finances are in very bad shape. Such countries exist in the industrialised world, in Europe and even in the eurozone,' he said.

'Not everyone can afford economic stimulus packages,' he added.

On the eurozone he said: 'The eurozone needs more economic policy co-ordination, otherwise divergences between the countries become too big and the stability of the economic zone is in danger.' If a eurozone member needs assistance, 'there is no way around it. They have to be helped,' he said.

He added that the IMF would step in if necessary, but that he expected 'Europe will be able to solve this problem themselves.'

Mr Strauss-Kahn also called on the European Central Bank to 'give more gas' to the eurozone economy by cutting interest rates further, and called on European governments to do more to help the continent's banks.

'There will be no economic recovery as long as the banks keep piling up more and more losses. Governments must clean up the banks,' he said.

'At the moment it is more effective to stick a euro into the banking sector than spend it on bridges and schools,' he said. -- AFP

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