The International Monetary Fund may need $150 billion more to help poor and emerging market economies weather the global downturn, IMF chief Dominique Strauss-Kahn said in an interview report published on Monday. Strauss-Kahn commended the economic stimulus efforts being prepared by US President-elect Barack Obama and said Europe was "behind the curve" on that score, according to Bloomberg news agency, which said it interviewed him on January 9.
He also said he expected interest rates to decrease further in Europe, but with limited impact on the economy. "Rates in Europe will probably go down in coming months," he said. "A decrease in interest rates is welcome but the impact will not be very important." Fifty-five of 70 economists polled by Reuters between December 30 and January 6 said the ECB would cut its key interest rate for the eurozone from a current 2.50 percent when it meets on Thursday January 15, while fifteen said no move was likely.
On IMF help for troubled economies, Strauss-Kahn said that the Washington-based lender of last resort could end up needing more funds itself to do that job if the financial and economic crisis got worse in the months ahead. "If in six months from now the crisis has worsened and many other of our members need our help, the demand may be above what we have," Strauss-Kahn said, according to Bloomberg.
"If the political decision is made to do something, I'm convinced that it will not be difficult to find the extra $150 billion". The IMF managing director said Western European governments were still underestimating the scale of fiscal stimulus that the economy required and that Europe, unlike the outgoing US administration and Obama, who takes over as US president on January 20.
"The Obama administration and the outgoing administration have really taken the measure of the push that is needed," he was quoted as saying. Strauss-Kahn also repeated that the IMF would likely lower its forecasts for economic growth further. In November, the IMF cut its projections for world growth next year to 2.2 percent - down 0.8 percentage point from an October forecast - and predicted industrialised economies were headed for the first full-year contraction since World War Two.