MercoPress. South Atlantic News Agency

IMF calls for more funding to help with global recovery

The head of the International Monetary Fund says it will need more funding if it is to play a bigger role in aiding a global economic recovery.

Dominique Strauss-Kahn told the BBC that the IMF was likely to need at least 100 billion US dollars of extra funding over the course of the next six months. Mr Strauss-Kahn also called on states to continue cutting interest rates. His comments came as the Japanese economy officially entered a recession, shrinking 0.1% in the third quarter. This follows a 0.9% contraction in the world's second-biggest economy in the previous quarter from April to June. On Saturday, G20 leaders agreed at a summit in Washington to co-operate closely to stimulate worldwide economic growth, with both developed and developing countries working to cut taxes and interest rates, and increase government spending. Finance ministers were also asked to discuss the longer-term reform of financial regulation, including executive pay and risky lending. Their proposals will be discussed at a follow-up summit in April most probably in Britain that will be chairing the G20 goup next year. The weekend's G20 meeting brought together leading industrial powers, such as the US, Japan and Germany, and emerging market countries like China, India, Argentina, Brazil, Mexico and others - representing 85% of the world's economy and two-thirds of its population. The communiqué issued after the summit stressed the International Monetary Fund's "important role in crisis response", welcomed its new short-term liquidity facility, and urged the ongoing review of its instruments and facilities to ensure flexibility. The BBC's Andrew Walker says the organisation does have substantial resources to lend to countries needing help to weather the economic storms. Before the summit the figure was 250 billion US dollars and then Japan made a commitment to provide another 100 billion. But in an interview with the BBC, the IMF managing director said that although it did have money enough for the immediate future, it was likely to need more. "The number of countries having problems at the same time has dramatically increased and they come to the IMF asking for support," Mr Strauss-Kahn said. "So we need more resources." He described the Japanese prime minister's offer on Friday as a "huge step forward", saying it meant the IMF now had "enough resources to address the problem we are facing today". "The question is to be able to face the problem in six months from now, and I think all the heads of state and governments are aware of the need for a strong IMF," he warned. Mr Strauss-Kahn said the organisation would probably need around 100 billion in additional funding in order to cope with increased demand. The IMF, he added, would seek to provide "some sort of safety net to protect the most vulnerable part of the population from the consequences of the adjustment". The former French finance minister also called on countries to tackle the economic crisis themselves by cutting interest rates and using government finances. He said the European Central Bank (ECB) had room for another rate cut. "In some parts of the world - Japan, the United States - interest rates have been cut very much, but it can be done more aggressively in other parts," he said. "I think now [the ECB has] room to decrease the interest rate, but nevertheless the stress has to be put on fiscal policy," he added.