IMF Urges Rich Countries to Support Poorer Countries to Cope with Crisis
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As the world's leading 20 developed and developing countries (G20) are gathering next week in Pittsburgh, the United States, the International Monetary Fund (IMF) urged Thursday the group to help poorer countries to tackle crisis.
"We must make sure that any global recovery also lifts the low-income countries. These countries desperately need additional financing to tide them over, to give them adequate breathing space to cope with this crisis," said Managing Director of the IMF Dominique Strauss-Kahn in a speech in Washington, D.C..
Kahn emphasized that thanks to sound economic policies, most low-income countries have responded well to the global financial crisis which originated from the rich countries.
"Since many of these countries ran good policies, they built foundations to ward off the storm. In the past, many low-income countries facing such a financial squeeze would have been forced to slash government spending, put administrative constraints on imports, or simply not pay their bills. But this time is different," he said.
Because of improved policies, three quarters of low-income countries have been able to increase their budget deficits to help combat the crisis. Of 27 low-income countries with available data,26 have been able to preserve or increase social spending -- a significant achievement in the current environment.
The managing director also said that there had been an unprecedented scaling up of IMF financial support and policy advice to low-income countries. This has helped provide poorer countries with the necessary room to ease macroeconomic policies.
Kahn added that the fund had gone "above and beyond" what the G20 asked at the London summit in April.
The IMF has increased its concessional lending to US$17 billion through 2014, and is front-loading this assistance so that 8 billion dollars is available over the next two years. In addition, the IMF Executive Board approved zero interest payments up to the end of 2011 for all concessional loans and lower interest rates on a permanent basis thereafter.
However, low-income countries remain highly vulnerable, Kahn stressed. He said that poor countries have longer-term needs for development financing, going well beyond what the IMF has the mandate or capacity to provide.
"The world community cannot ignore the needs of the low-income countries, especially since the poorer countries are paying the price for rich country mistakes," added Kahn. "Countries must resist the temptation to reduce aid, or to engage in trade or financial protectionism."
The G20 is scheduled to hold its third round of meeting in Pittsburgh on September 24-25. The group includes Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey, Britain and the United States. The European Union, represented by its rotating presidency and the European Central Bank, is the 20th member.
(Xinhua News Agency September 18, 2009)