Wednesday, October 29, 2008

IMF, too is running out of cash

British Premier Gordon Brown yesterday warned that the International Monetary Fund (IMF) might not have enough money to halt the spread of financial "contagion" through the world's economies. Embarking on a diplomatic offensive to secure hundreds of billions of dollars in additional financial support for the IMF, Brown called for immediate action. His intervention came after Hungary and Ukraine accepted IMF assistance to prop up their battered economies as the financial crisis has torn through Eastern Europe. The 250 billion dollar fund currently available to the IMF to lend to financially stricken states "may not be enough". "It is becoming increasingly clear to me that we cannot delay and that we now need substantial additional resources in addition to the 250 billion dollars the IMF already has available," he said. Aides later refused to set a figure but said the required cash was likely to run into hundreds of billions. The premier did not rule out a British contribution to the enhanced fund, but made clear he believed the bulk of any additional money should come from China and the oil rich states of the Gulf. "Yes, we will play our part, but the biggest part can be played by countries that have got the biggest surpluses," he said.

5 comments:

Anonymous said...

Was Flip Flopping Astro Awani (Dr M interview) and BBC last night.

I think the country owed a big Thank you to Dr M.

It was reported that Iceland had raised the interest rate from 12% to 18% due to IMF precondition resulting from borrowing USD 2 billion. 18%; does it not remind us of Malaysia in 1997???

And, Iceland still needs USD 4 billion more, and its begging its Viking neighbours for the loan!


MRSM Kalae Chepo 66/73

jeremy, UKM said...

looking at it, malaysia too may end up tightening its belt.

our fundamentals may be strong but to be over-optimistic with our bias economic reports will lead us to another post-1997 era.

najib got lots more to learn

Anonymous said...

even the IMF is in difficulties. what about us? if we spend in unnecessary projects, we will fall as well.

we need a prudent economic management. najib must look into his priorities when he takes over from abdullah badawi in march 2009.

there are lessons to be learnt from IMF and other incidents which led to the fall of some financial institutions worldwide.

adam harris said...

Jai,

Despite the disagreements within the economic profession on many issues, our Finance Minister should be a privy to a body of knowledge about the economic relationships and patterns that drive a modern economy.

Often this relationship is not simple, and some of the most important ones are counter intuitive. Unfortunately many people who make or assess policy are vaguely acquainted with economic principles, relying dimly remembered college courses, or rule of thumb picked up over the years, many of which likely to be wrong.

Someone, in the stature of Tun Dr Mahathir should advise the Finance on about how the economy works and the effects of various macroeconomic policies.

I am in the opinion that, people in the 4th floor are to green to advise or for that matter look at Anwar Ibrahim,in 1998, who influenced him...IMF-another debacle.

My Raison D'etre said...

Saudara,

IMF should not be so flippant as to bail out everyone.

As seen in the States, some financial institutions shot themselves in their respective foots through sheer beglect of good governance.

Read one such account here .

All those years ago, we were told toe the line.

Now when the ball is in their courts, suddenly Asians are asked to be benovelant.

Those countries with fund should just buy over the better instutions and let the rest fail or be absorb.

Credit to Brown though for seeing how bad things could get way before Paulson & Co.