Joint WB-IMF meet in Washington tomorrow
Friday, 24 April 2009
From Fazle Rashid
NEW YORK, April 23: The joint meeting of the World Bank (WB) and the International Monetary Fund (IMF) begins in Washington from Saturday. The finance ministers of the member nations have started descending on the US capital amidst a global economic situation that offers no sign of respite from the gale that is raging with all its fury.
The losses suffered due to meltdown, according to the latest IMF projections, now stand at $4.1 trillion. And to repair the damages a total of $1.0trillion would be needed. The huge numbers illustrate the depth of worldwide economic upheaval and the challenges facing the financial institutions, New York Times (NYT) in a report said.
The current inability to attract private money suggests the crisis has deepened to a point where governments need to take bolder step and not shrink from capital injections even it means taking majority or even complete control of the institutions, an analysts said. The IMF has expressed concern over tax payers becoming weary of supporting the financial sector.
The money pledged to the IMF to make it lender of last resort at the London summit of the Group of Twenty (G20) nations has yet to make a beginning. Now the IMF must figure out how to turn those pledges into hard cash. "We would be deluding ourselves if we think it is going to solve crisis," said an expert at a meeting titled " can the IMF really save the world". The answer was an emphatic no
The IMF insiders fear that the money pledged by two mega giants -- the USA and China -- may not come. Using funds on hand , the World Bank (WB) said it would triple its investments in social safety-net programmes to $12 billion over the next two years to protect people in developing countries from facing poverty, hunger or disease because of the crisis, the NYT said.
The IMF has already agreed to pay $55 billion in loans to Hungary, Serbia, Romania, Iceland, Ukraine and Belarus. More countries may seek bailout assistance. It is being openly said that IMF may run out of cash if it is asked to meet so many demands. The IMF fears it may have to extend its hands of assistance to countries in western Europe as well. The Fund estimates that the financial institutions will have to write down $1.19 trillion in loans and securities in western Europe. Banks in US have already written down $510 billion in 2008 and they face an additional $550 billion in 2009 and 2010.
If European and US banks took all the write downs they faced immediately, it would wipe out their common equity altogether, the IMF said. The agenda to reform the IMF and restructure its shareholding is in danger of being sidelined, a newspaper quoted Yousuf Boutros-Ghali, chairman of Fund's policy sterring committee as saying. The governments that lent their support to the plan during G20 summit in London are now backtracking
Europe has eight seats on the IMF board and 30 per cent of voting compared to only 17 per cent and one seat for US. America of course has the right to veto.China and India have quotas lower than some smaller European countries. Yusuf Boutros Ghali beat India's finance minister and its home minister Palaniapan Chindabarm last October to win the IMF assignment.
He wants the IMF to act not only as global policeman but also as a global witchdoctor. He went out to assert that the IMF is much more legitimate body than the G20 to address the global crisis.
NEW YORK, April 23: The joint meeting of the World Bank (WB) and the International Monetary Fund (IMF) begins in Washington from Saturday. The finance ministers of the member nations have started descending on the US capital amidst a global economic situation that offers no sign of respite from the gale that is raging with all its fury.
The losses suffered due to meltdown, according to the latest IMF projections, now stand at $4.1 trillion. And to repair the damages a total of $1.0trillion would be needed. The huge numbers illustrate the depth of worldwide economic upheaval and the challenges facing the financial institutions, New York Times (NYT) in a report said.
The current inability to attract private money suggests the crisis has deepened to a point where governments need to take bolder step and not shrink from capital injections even it means taking majority or even complete control of the institutions, an analysts said. The IMF has expressed concern over tax payers becoming weary of supporting the financial sector.
The money pledged to the IMF to make it lender of last resort at the London summit of the Group of Twenty (G20) nations has yet to make a beginning. Now the IMF must figure out how to turn those pledges into hard cash. "We would be deluding ourselves if we think it is going to solve crisis," said an expert at a meeting titled " can the IMF really save the world". The answer was an emphatic no
The IMF insiders fear that the money pledged by two mega giants -- the USA and China -- may not come. Using funds on hand , the World Bank (WB) said it would triple its investments in social safety-net programmes to $12 billion over the next two years to protect people in developing countries from facing poverty, hunger or disease because of the crisis, the NYT said.
The IMF has already agreed to pay $55 billion in loans to Hungary, Serbia, Romania, Iceland, Ukraine and Belarus. More countries may seek bailout assistance. It is being openly said that IMF may run out of cash if it is asked to meet so many demands. The IMF fears it may have to extend its hands of assistance to countries in western Europe as well. The Fund estimates that the financial institutions will have to write down $1.19 trillion in loans and securities in western Europe. Banks in US have already written down $510 billion in 2008 and they face an additional $550 billion in 2009 and 2010.
If European and US banks took all the write downs they faced immediately, it would wipe out their common equity altogether, the IMF said. The agenda to reform the IMF and restructure its shareholding is in danger of being sidelined, a newspaper quoted Yousuf Boutros-Ghali, chairman of Fund's policy sterring committee as saying. The governments that lent their support to the plan during G20 summit in London are now backtracking
Europe has eight seats on the IMF board and 30 per cent of voting compared to only 17 per cent and one seat for US. America of course has the right to veto.China and India have quotas lower than some smaller European countries. Yusuf Boutros Ghali beat India's finance minister and its home minister Palaniapan Chindabarm last October to win the IMF assignment.
He wants the IMF to act not only as global policeman but also as a global witchdoctor. He went out to assert that the IMF is much more legitimate body than the G20 to address the global crisis.