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UPDATE 2-IMF says will need more resources to tackle crisis

Published 11/18/2008, 12:46 PM
Updated 11/18/2008, 12:50 PM

(Adds quotes, ECB, background, twins dateline with TUNIS)

By Salah Sarrar and Sonia Ounissi

TRIPOLI/TUNIS, Nov 18 (Reuters) - The International Monetary Fund will likely need rapidly increasing amounts of extra funding to tackle "a genuine world crisis" caused by international financial turmoil, its managing director said on Tuesday.

Increasing numbers of countries were asking for help and if things turned worse even more funding could be needed for the world lender, Dominique Strauss-Kahn told a news conference in the Libyan capital Tripoli on a tour of north Africa countries.

"Next year will be a difficult year. We are in a genuine world crisis, Past crises were regional. This is the first time the crisis is global," Strauss-Kahn later said at his next stop in neighbouring Tunisia.

"As a result those countries seeking IMF support are more numerous than usual. Today we have the necessary resources to come to their help. But there is no guarantee that in the next six months we will not need more supplementary funding."

Other countries are set to follow Japan in providing extra support to the IMF, he said, referring to a statement by Japan last week that Tokyo was ready to offer up to $100 billion to the IMF to assist emerging economies.

"Japan has taken the initiative to increase the funds by $100 billion and by opening the way I think others will follow the Japanese steps in the next weeks and months," he said.

But he added: "Without doubt, for the next six months, it's possible that things could get worse, and it's possible that we would need more resources," he said.

"In this case all central banks who contribute to the funding of the IMF will augment their contribution to the fund -- even those from the Gulf countries if they wish."

The European Central Bank (ECB) declined to comment.

But in Frankfurt, ECB Governing Council member Erkki Liikanen, when asked if the ECB was ready to give funding to the IMF and if so how much, told reporters on the sidelines of a Bank of Finland event:

"We will assess when (the) request comes ... I don't comment now, but of course the climate is now changing, there is growth in (the) number of countries needing funding."

Strauss-Kahn told the BBC this week his organisation was likely to need at least $100 billion in extra funding over the next six months in order to help countries out of the mire.

"It is true to say that because of globalisation the amount which the IMF is asking for is increasing, and increasing rapidly, and the list of countries asking for some support is increasing every day," he said.

Emerging markets, mostly in eastern and central Europe, are now seen among the most exposed to global turmoil that is pressuring their currencies, economies, borrowers and banks as investors withdraw funds.

Ukraine, Hungary, Serbia, Belarus and Turkey are all seen talking to the IMF about either rescue or standby packages. (Reporting by Salah Sarrar and Sonia Ounissi, editing by Lamine Ghanmi, William Maclean, Ron Askew and Victoria Main)

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