Following the meeting of G-7 finance ministers and central bankers held last weekend in Rome, IMF Managing Director Dominique Strauss-Kahn remarked that “[a]long with implementing planned economic stimulus measures, the next critical step in combating the global financial crisis is to restructure damaged banks and clean up the financial sector.” Based on the result of the IMF’s study of “122 banking crises around the world,” Mr. Strauss-Kahn highlighted the importance of cleaning up banks’ balance sheets in order to create a stronger framework for supporting economic recovery. At the meeting, the G-7 ministers supported a proposal to “increase the resources available to the IMF to help support countries hurt by the crisis.” Last Friday, the Japanese government agreed to lend the IMF $100 billion to help bolster its lendable resources. Mr. Strauss-Kahn concluded his statement by noted that this year was going to pose severe challenges to developing countries seeking financing, however, that “the IMF and the World Bank [would] provide lending to low-income countries at concessional rates to help finance their development.”
In advance of the summit, Mr. Strauss-Kahn cautioned countries about the “dangers of protectionist solutions to the crisis” which in certain instances include measures to restrict government aid domestically. He further reiterated the IMF’s projection that both advanced and emerging economies would experience little growth in 2009. He indicated that the recent adoption of economic fiscal stimulus packages by member countries, including the United States (which passed its $787 package last Friday), was a hopefully sign but that governments now had the duty to implement them.