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in the global financial crisis helped them weather the worst of the
turmoil, according to an internal IMF study published Sunday. A mix
of increased resources, policy flexibility, and more focused
conditionality on financing had allowed the IMF to provide improved
support, the 186- nation institution said. In the report "Review of
Recent Crisis Programs, " the IMF said the fund-supported programs
were delivering the kind of policy response and financing needed to
help cushion the blow from the worst financial crisis since the 1930
s Great Depression. "What this study tells us is that, with IMF
support, many of the severe disruptions characteristic of past crises
have so far been either avoided or sharply reduced," IMF managing
director Dominique Strauss-Kahn said in a statement. Strauss-Kahn
underscored that serious challenges remained, particularly in
restoring sustained economic growth and higher employment, but he
also said there were " encouraging signs of stabilization." "The
governments and peoples of the countries concerned deserve the credit
for these efforts," he said. Still, the study cautioned that daunting
challenges remain as the global economy stabilizes from the worst
global recession since World War II, including the timely unwinding
of fiscal and monetary stimulus and fixing bank balance sheets. The
economists compared the typical economic and financial effects of
past crises and analyzed why those outcomes had been avoided so far
in most cases in Armenia, Belarus, Bosnia & Herzegovina, Costa Rica,
El Salvador, Georgia, Guatemala, Hungary, Iceland, Latvia, Mongolia,
Pakistan, Romania, Serbia, and Ukraine. Key factors for the improved
results included the fund's rapid mobilization of large financing
packages for countries hit by the global financial turbulence of late
2008 that followed the collapse of Wall Street investment bank in
mid- September. Almost all the financing packages provided access
beyond the normal limits to fund resources, with more front-loaded
disbursements. In a number of European programs, private sector
involvement was sought. "Importantly, official financing has been
used more to meet actual funding constraints of the private and
public sectors, less to replenish central banks reserves," the IMF
said.
