Yesterday, the IMF released a survey which addressed its measures taken thus far to “counter crisis fallout in emerging Europe,” and outlined broadly strong policy actions to be adopted by European governments in order to overcome the recession.
The survey highlighted the importance of European leaders continuing to coordinate their actions in reforming the European financial system and implementing appropriate fiscal measures designed to stimulate the economy within the upcoming year. Mr. Marek Belka, head of the IMF’s European Department and former prime minister and minster of finance of Poland, referred to the current crisis as a ‘wake-up call” intended to “strengthen cooperation in the area of financial stability, especially when it comes to cross-border financial institutions.” He stressed that the IMF together with its European leaders should “not remain entirely focused on finding immediate solutions to the crisis” but that some thought should “be given to developing a longer term response.”
Undoubtedly, the economies of Central and Eastern Europe have been badly affected by the current crisis. With respect to requiring “crisis” countries to adopt or maintain a flexible or fixed exchange rate as a condition to receiving an IMF loan, Mr. Belka, acknowledged that the IMF’s “approach is to be pragmatic and decide what to recommend based on an analysis of the situation in each individual country.” Presently, the IMF is working with the European Union, the World Bank, the European Bank for Reconstruction and Development and other regional partners to provide assistance to other Central and Eastern European countries affected by the crisis as demonstrated in the recent case of Latvia and Hungary. The IMF has also approved Stand-By Arrangements for Ukraine, Pakistan, Iceland and Belarus.