The International Monetary Fund (IMF) on Monday called on the international community to act urgently and generously to avoid the potentially devastating effects of the current financial crisis on the most vulnerable countries.

"After hitting first the advanced economies and then the emerging economies, a third wave from the global financial crisis is now hitting the world's poorest and most vulnerable countries," said IMF Managing Director Dominique Strauss-Kahn at the launch of a new IMF study.

The study, entitled "The Impact of the Financial Crisis on Low-Income Countries," finds that more than 20 countries are particularly vulnerable to the unfolding crisis.

At least US$25 billion in urgent concessional financing will be needed this year in the most affected countries, but much more may be needed given the heavy downside risks to the global economic outlook, and the prospect of more countries being affected as the crisis deepens, according to the study.

"This (crisis) puts at risk the major achievements of higher growth, lower poverty, and greater political stability that many low-income countries have made over the past decade," said the IMF chief. "I urge donors to rise to the challenge and provide the financing needed to preserve these hard-won gains and prevent a humanitarian crisis."

"At a time when the advanced economies are spending hundreds of billions of dollars on fiscal stimulus and financial sector restructuring, we must find room to help low-income countries," Strauss-Kahn noted.

He also warned that lower growth could have serious implications for poverty and potentially also for political stability, adding that spending on targeted social safety net programs should be ramped up to protect the poor. At the same time, it will be critical to protect spending on health, education, and vital infrastructure.

Strauss-Kahn emphasized his goal to double the IMF's concessional lending capacity. He added that the IMF is also looking at ways to make its lending to low-income countries more flexible, reflecting their growing diversity and heightened exposure to global volatility.

"The IMF is mounting an extraordinary response to what is an extraordinary crisis facing the world's poorest economies," he said.