Finance crisis 'far from over'

IMF says banks have to work harder to clear bad debts but predicts recovery in 2010.

    Strauss-Kahn said banks had to work harder
    to clear their bad debts [AFP]

    They also come as the World Bank, which is also scheduled to meet over the weekend, said on Thursday it would provide $45bn over the next three years to support road building and other infrastructure projects in poor nations.

    Robert Zoellick, president of the World Bank, said the money would support job creation and "help jump start a recovery from the crisis."

    He also said the US and Europe should "reconsider old prerogatives" and allow developing countries a greater voice in management of the World Bank.

    Recovery 'in 2010'

    Strauss-Kahn said he was confident that some form of recovery would take place in the first half of 2010.

    Any recovery however, he said, relied on banks ridding their balance sheets of bad loans, accumulated during the US subprime housing crisis that undermined confidence and froze credit across the globe.

    "You never recover before you complete the cleaning up of the balance sheet of the financial sector," he said.

    "The recovery in 2010 relies a lot upon the effort that still has to be made in this domain. So, I'm again asking on the eve of these meetings for more effort to be made in this direction."

    The IMF estimates that the US, European and Japanese banks will have acknowledged only a third of their losses on such bad assets between mid-2007 and 2010.

    Response defended

    Strauss-Kahn defended the IMF's response to the global crisis, pointing to its increased lending to emerging market countries hit hard by both the credit crisis and the subsequent collapse in trade and saying "we did what we had to do".

    However, he acknowledged that the IMF needed to become more effective in monitoring economies and warning of potential crises.

    In a separate speech, also on Thursday, he said the organisation must change its governance structure to give more influence to emerging market nations or risk losing legitimacy.

    SOURCE: Agencies


    YOU MIGHT ALSO LIKE

    Interactive: Take a tour through divided Jerusalem

    Interactive: Take a tour through divided Jerusalem

    Take a tour through East and West Jerusalem to see the difference in quality of life for Israelis and Palestinians.

    Stories from the sex trade

    Stories from the sex trade

    Dutch sex workers, pimps and johns share their stories.

    Inside the world of India's booming fertility industry

    Inside the world of India's booming fertility industry

    As the stigma associated with being childless persists, some elderly women in India risk it all to become mothers.