IMF chief urges more aid for poorest countries

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International Monetary Fund chief Dominique Strauss-Kahn urged stepped-up aid for poor countries that were innocent victims of the global financial crisis.
Speaking to the Centre for Global Development a week before next week’s Group of 20 leaders’ gathering in Pittsburgh, the IMF managing director estimated that low-income countries need another $55 billion (R410 billion) in financing for this year and next, Reuters reports.
Strauss-Kahn said the IMF could provide about one-third of the needed additional financing for poor countries through new resources that its member countries have pledged, but donors need to step up to the plate.
“A further scaling up of aid is needed urgently,” he said.
A day earlier, World Bank President Robert Zoellick called on G20 leaders at their September 24-25 meeting to increase resources for the poorest countries and not to forget them as the economies of richer countries gradually recover.
“We’re entering a new danger zone, not of freefall, but of complacency,” Zoellick warned a theme that Strauss-Kahn also picked up on.
“At times like this, there is always a temptation for countries to retreat inwards, to look first to their own problems, to respond primarily to domestic political needs and demands,” Strauss-Kahn said.
But he warned that if that happens, years of progress might be unwound and democracy in some of the poorest countries would be put at risk.
“These countries desperately need financing to tide them over, to give them adequate breathing space to cope with the crisis,” Strauss-Kahn said, noting that recent drought in East Africa highlights the urgency of challenges faced by the poor.
The IMF is taking steps to make its financing for the poor cheaper, charging no interest through the end of 2011 on so-called concessional financing. This type of financing is typically for long maturities and at below-market rates.
Strauss-Kahn’s message was not entirely bleak.
“I do expect a recovery in 2010, when low-income countries should be able to ride the wave of rising world demand,” he said, but the pace of global recovery was “far from assured” and poor countries may suffer after-effects for years.

Pic: IMF Chief- Dominique Strauss- Kahn