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Strategies & Market Trends : Waiting for the big Kahuna -- Ignore unavailable to you. Want to Upgrade?

To: robnhood who wrote (27795)	9/14/1998 7:10:00 AM
From: flickerful	Read Replies (1) \| Respond to of 94695

IMF: Fund ready to support Brazil By Robert Chote in London....financial times/sept14 Financial assistance for the economies of Asia and Russia is pushing the International Monetary Fund's liquidity to historic lows, but the institution believes it could find the money to rescue Brazil if it had to. Stanley Fischer, first deputy managing director of the Fund, said yesterday that the fund had just $5bn to $9bn 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 still ready to do what it could to help Latin America, where countries have increased interest rates in the wake of the Asian and Russian financial crises. Senior financial and foreign ministry officials from the Group of Seven leading industrial countries will meet in London today to discuss the Russian financial crisis and its knock-on effects. Officials from the IMF, World Bank, European Union and European Bank of Reconstruction and Development will also attend. Michel Camdessus, the IMF's managing director, has repeatedly promised that member countries in need of assistance will get adequate support, even though the institution's finances have been weakened by heavy lending. "I have no intention whatsoever of cutting financing of any programme before us whatsoever, or alleging that there wouldn't be enough money in our reserves or in our coffers," he said following a recent meeting of Latin American finance ministers. The IMF's finances have been brought into sharper focus by Brazil's struggle to halt a flood of dollars from the country. Last week, the central bank's primary lending rate was pushed up to nearly 50 per cent. Analysts believe a rescue package could cost $20bn-30bn. But with Brazil's reserves down to around $50bn - and far more due to be paid in short-term external loans over the next few months - even this could be insufficient. The IMF's annual report, published yesterday, reported that total outstanding credit rose by $20bn during the last financial year, to just over $75bn by the end of April. The Fund expects to have $23bn in uncommitted usable resources by the end of the year. This puts the ratio of uncommitted usable resources to liquid liabilities at 29 per cent, well below the IMF's 70 per cent "comfort level". But the Fund cannot exhaust these resources in case member governments call on the reserves they keep deposited at the Fund, as they are entitled to do. In a boost for the Fund, the House Appropriations Committee in the US Congress last week agreed to provide money to double the general arrangements to borrow.