By — PBS News Hour PBS News Hour Leave your feedback Share Copy URL https://www.pbs.org/newshour/economy/international-jan-june09-imfmeeting_04-24 Email Facebook Twitter LinkedIn Pinterest Tumblr Share on Facebook Share on Twitter International Monetary Fund Considers How to Help Poor Countries During Downturn Economy Apr 24, 2009 3:50 PM EDT At the G-20 summit earlier this month, world leaders decided to give the IMF $500 billion to lend to countries in need. So far, G-20 member countries have made about $340 billion in concrete pledges, a senior Treasury official told the Wall Street Journal. Earlier this week, the IMF released a gloomy economic outlook that predicted 1.3 percent drop in the global economy this year — much weaker than the half percent growth it estimated in January. “By any measure, this downturn represents by far the deepest global recession since the Great Depression,” the Fund said in its latest World Economic Outlook. “All corners of the globe are being affected.” Last month, the IMF predicted global activity would contract this year “for the first time in 60 years,” though it didn’t offer a precise estimate then. As the worldwide recession spreads, the IMF is anticipating more demand for its loans. In the last six months it has put out more money than in any other comparable period in its history, according to the BBC. The Fund has already announced nearly $150 billion in loan commitments, including a $47 billion line of credit to Mexico. However, not all of that money will necessarily be used. The U.S., Japan and Europe have each announced $100 billion in extra money for the fund. Although President Obama has agreed to the funding commitment, he is facing some resistance in congress. Rep. David Obey (D-Wisc.) has said he is reluctant to approve the funding boost unless European countries agree to pass larger stimulus plans to jumpstart the world economy. The head of the IMF’s top advisory committee told the Journal that the IMF should use the new funding to help poor countries without forcing those countries to make drastic budget cuts. “You need to make sure fund intervention doesn’t make things any worse,” Egyptian Finance Minister Youssef Boutros-Ghali told the paper. In the past the IMF has been criticized for requiring countries receiving assistance to reduce their spending, which some say can make recessions worse. But in a Wall Street Journal interview, IMF Managing Director Dominique Strauss-Kahn defended the practice. “If you don’t fix the fiscal problem, you just waste your money, and after a few years you’re back to square one,” he said. Meanwhile, in the background at this meeting will be questions of how to give more voting power at the IMF to emerging economic powers such as China. “The governance of the Fund needs to look like the global economy. It cannot be the old boys club from Western Europe and the U.S.,” former U.S. Treasury Under-Secretary Timothy Adams told Reuters. We're not going anywhere. Stand up for truly independent, trusted news that you can count on! Donate now By — PBS News Hour PBS News Hour
At the G-20 summit earlier this month, world leaders decided to give the IMF $500 billion to lend to countries in need. So far, G-20 member countries have made about $340 billion in concrete pledges, a senior Treasury official told the Wall Street Journal. Earlier this week, the IMF released a gloomy economic outlook that predicted 1.3 percent drop in the global economy this year — much weaker than the half percent growth it estimated in January. “By any measure, this downturn represents by far the deepest global recession since the Great Depression,” the Fund said in its latest World Economic Outlook. “All corners of the globe are being affected.” Last month, the IMF predicted global activity would contract this year “for the first time in 60 years,” though it didn’t offer a precise estimate then. As the worldwide recession spreads, the IMF is anticipating more demand for its loans. In the last six months it has put out more money than in any other comparable period in its history, according to the BBC. The Fund has already announced nearly $150 billion in loan commitments, including a $47 billion line of credit to Mexico. However, not all of that money will necessarily be used. The U.S., Japan and Europe have each announced $100 billion in extra money for the fund. Although President Obama has agreed to the funding commitment, he is facing some resistance in congress. Rep. David Obey (D-Wisc.) has said he is reluctant to approve the funding boost unless European countries agree to pass larger stimulus plans to jumpstart the world economy. The head of the IMF’s top advisory committee told the Journal that the IMF should use the new funding to help poor countries without forcing those countries to make drastic budget cuts. “You need to make sure fund intervention doesn’t make things any worse,” Egyptian Finance Minister Youssef Boutros-Ghali told the paper. In the past the IMF has been criticized for requiring countries receiving assistance to reduce their spending, which some say can make recessions worse. But in a Wall Street Journal interview, IMF Managing Director Dominique Strauss-Kahn defended the practice. “If you don’t fix the fiscal problem, you just waste your money, and after a few years you’re back to square one,” he said. Meanwhile, in the background at this meeting will be questions of how to give more voting power at the IMF to emerging economic powers such as China. “The governance of the Fund needs to look like the global economy. It cannot be the old boys club from Western Europe and the U.S.,” former U.S. Treasury Under-Secretary Timothy Adams told Reuters. We're not going anywhere. Stand up for truly independent, trusted news that you can count on! Donate now