The International Monetary Fund (IMF) has announced forthcoming loans for Hungary and Ukraine – the latter potentially receiving up to $16.5 billion – to strengthen both countries’ financial systems and ensure fiscal sustainability.
“An IMF staff mission and the Ukraine authorities have today reached agreement, subject to approval by IMF Management and the Executive Board,” said IMF Managing Director Dominique Strauss-Kahn yesterday.
“Ukraine has developed a comprehensive policy package designed to help the country meet the balance of payments needs created by the collapse of steel prices, and the global financial turmoil and related difficulties in Ukraine’s financial system.”
Issued under a 24-month standby arrangement, the loan will address financial sector liquidity and solvency problems.
In the case of Hungary, IMF has been working with both the country’s authorities and the European Union (EU) to outline a framework of policies that will shore up the Hungarian financial sector and ensure economic growth potential.
“A substantial financing package in support of these strong policies will be announced when the program is finalized in the next few days…the policies Hungary envisages justify an exceptional level of access to Fund resources,” said Mr. Strauss-Kahn.
The announcement follows an agreement last Friday to loan Iceland more than $2 billion over two years in support of an economic programme to help restore confidence in the Nordic country’s banking system and stabilize its currency.
Last Friday Mr. Strauss-Kahn also joined Secretary General Ban Ki-moon at the meeting of the Chief Executives Board (CEB) – which brings together the heads of various UN agencies and entities, the World Bank and the IMF – where leaders discussed issues of global financial crisis, particularly their impact on the world’s poorest.
“The crisis we are seeing today will impact all countries, developed and developing, but its most serious repercussions will be felt most by those who are least responsible – the poor in developing countries,” the officials said in a joint statement after the meeting.
During the meeting, the Secretary-General told participants that “drastic measures” will be needed to resolve the financial crisis, possibly including the IMF and the world's major central banks setting up substantial standby lines of credit so that banks in poor countries have adequate funds to draw on in an emergency.
Following the conference, Mr. Ban reiterated the UN’s position on the global financial crisis and the needs of the undeveloped world.
“All agreed that the UN has a special responsibility, the protection of the poorest and most vulnerable...We express our full commitment to the cause of economic development and will do our utmost to deal with the repercussions of this worldwide crisis,” he said.
On 15 November world leaders – including Mr. Ban – will gather in Washington for a summit to devise ways to respond to the crisis.