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To: djane who wrote (7949)	9/13/1998 8:47:00 PM
From: djane	Respond to of 22640

IMF Lends Record Amounts of Money Sunday September 13 2:11 PM EDT HARRY DUNPHY Associated Press Writer WASHINGTON (AP) - The International Monetary Fund lent record amounts of money in the past year to deal with financial crises that swept Asia and Russia, underscoring the need for Congress to replenish its coffers for future emergencies, a senior fund official said Sunday. Presenting the IMF's annual report, Deputy Director Stanley Fischer said the $26 billion in loans has shrunk reserves to historically low levels, with only $5 billion to $9 billion left to lend from its regular reserve fund. The Clinton administration has requested an additional $18 billion for the IMF, $14.5 billion for an increase in the U.S. share and $3.5 billion for the emergency fund. Last week the Senate approved the full amount, but a House panel authorized only the $3.5 billion in emergency funds. Some influential Republicans have tied their support for IMF funding to what they say is needed reform for the organization. The administration nonetheless hopes negotiations between the House and Senate will bring approval for the full $18 billion. Increases in the IMF's regular reserves and the emergency fund cannot be adopted without the United States, the largest shareholder. In the face of this Washington debate, Fischer said he could envisage the IMF using some of its reserves for future loans but only if it knew additional resources would be available soon from the United States and other members. ''All these data underscore the need to strengthen our financial resources, both through the approval of the quota increase and approval'' of a special emergency fund, Fischer said. ''As you can see, demands on our resources are not declining now. Everyone knows the fund's role in Latin America is at issue.'' But even as Latin American markets experience similar financial unrest to that of Asia and Russia, Fischer said that so far no Latin American nation has requested IMF funds. Still, he said, ''there was a record level of fund lending'' in the past year, when member countries borrowed the $26 billion, or almost four times the loans of the previous year. Fischer said these commitments and possible future financial emergencies in other countries make rapid congressional action even more necessary, because the ''international financial system needs a functioning IMF.'' He declared it premature to speculate on what would happen if Congress fails to support the IMF. In response to suggestions from U.S. Republicans, Fischer said the IMF's substantial gold reserves could not be tapped because they provide assurance to members of the organization's financial viability. He also said the IMF could not borrow funds from international financial markets because that would mark a fundamental change the way the fund has operated since its creation 53 years ago. Congressional Republicans have promoted both the gold reserves and the idea of borrowing from the markets as means of replenishing the IMF's coffers without using U.S. taxpayers' money. The report was issued in advance of the annual meetings of the IMF and its sister organization, the World Bank, which begin Sept. 30. Fischer said the meetings will focus on strengthening the international financial system based on the Asian and Russian experiences. Copyright c 1998 The Associated Press. All rights reserved. The information contained in the AP News report may not be published, broadcast, rewritten or redistributed without the prior written authority of The Associated Press.

To: djane who wrote (7949)	9/13/1998 8:51:00 PM
From: djane	Read Replies (1) \| Respond to of 22640

IMF Short Of Cash As World Financial Problems Mount Sunday September 13 12:15 PM EDT By Janet Guttsman WASHINGTON (Reuters) - The International Monetary Fund said its reserves were running low after big rescue deals in Asia and Russia, leaving it with as little as $5 billion to cope with mushrooming problems elsewhere. First Deputy Managing Director Stanley Fischer told a news conference about the IMF's annual report, released Sunday, that the fund had just $5 billion to $9 billion available to lend, taking account of the need to let member countries draw on the cash they were depositing with the lending institution. But he said the IMF was nevertheless ready to do what it could to help Latin America, where countries have jacked up interest rates to protect currencies and where markets are reeling from the knock-on effect of Russia's financial woes. Fischer called on the United States and other countries to come up quickly with extra cash. ''The situation in the global economy unfortunately, very regrettably, is becoming extremely difficult and the resources now available are limited in ways that are unhelpful to increasing confidence in the international system,'' he said. But selling some of the IMF's 104 million ounces of gold reserves was not the answer, Fischer said. ''We are not going to operate in a way which puts our shareholders' resources at risk,'' he said. ''We need to hold those gold reserves as the ultimate assurance to our members of the value of their claims on this institution.'' The IMF's annual report said countries borrowed $25.6 billion from the fund in the financial year to April 30, nearly four times as much as in 1996/97. IMF liquidity ratios have fallen sharply. ''As you can see today, the demands on the fund's resources are not declining right now,'' Fischer said. ''The fund's role in Latin America is also at issue.'' The IMF said Friday it was ready to put together rescue packages for Latin American countries. But Fischer said the fund had not received a request for help. The IMF, set up to rebuild the world financial system after World War Two, receives money from member states in the form of quotas -- effectively subscriptions to the institution. Rich countries also contribute to a special $23 billion emergency fund, the General Arrangements to Borrow, which was used in July for the first time in almost 20 years to provide part of a big loan to Russia. Fischer declined to speculate on what would happen if the U.S. Congress did not approve a Clinton administration request for $18 billion of extra cash, some of it to increase the quotas and some to create a new emergency fund, the New Arrangements to Borrow. But he made clear that failure to approve the money could have a bearing on Washington's role in the institution. The United States is the IMF's biggest shareholder and its 18 percent of the votes gives it veto power over major decisions. ''There are decisions of enormous importance being made now about the role the United States plans to take in a global economic system that it ... created in 1945,'' he said. ''It is not a small decision to decide to abandon that system and I think we should not at this stage be crossing hypothetical bridges as to how the world would look if the U.S. Congress decides not to support the IMF.'' Fischer said he still hoped Congress would approve the extra cash, which would unlock payments from other states. ''There are countries out there who need assistance,'' he said. ''The system needs a functioning IMF, able to provide assistance to members who are doing the right thing and who, for reasons not under their control, are facing great difficulties.'' Deputy finance ministers from rich industrialized countries are meeting in London Monday to discuss Russia's problems and work out what can be done there and elsewhere. Some observers expect ministers to float the idea of a fund which could be disbursed to help countries combat speculative attacks on global markets. It could be unveiled at the annual IMF conference in October. Copyright c 1998 Reuters Limited. All rights reserved. Republication or redistribution of Reuters content is expressly prohibited without the prior written consent of Reuters. Reuters shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon.