International Monetary Fund Managing Director Dominique Strauss-Kahn said on Monday he feared more countries may need IMF bailout packages and said it was not inconceivable that Britain might one day need help.
“I’m afraid, we’re not hoping that, but I’m afraid that some other countries, not only in eastern Europe, but all around the world (may need help),” he said when asked if he believed other countries, particularly in Europe, would have to seek IMF bailouts. He was speaking in a BBC interview, an excerpt of which was broadcast on Monday.
The IMF has recently agreed packages for several countries, including Iceland, Hungary and Ukraine. Strauss-Kahn said he did not think Ireland or Britain would need an IMF bailout to overcome the effects of the global financial crisis. On Britain, which had to seek IMF help in 1976, he said: “It has been part of the history several years ago, but it is not the case today.”
Asked if he was absolutely confident the British government might never seek IMF help, he said: “We never know, you know. One year ago, if somebody had said that a Republican government in ... the US, would nationalize part of the banking system you would have said it’s totally impossible. It happened. So never say never.”
"But, at this juncture, there is no risk for advanced economies (except for) some very small advanced economies like Iceland, for instance, for specific reasons, to need some kind of bailout," he said.
Later on Monday, Britain will throw its banks another multi-billion pound lifeline by allowing them to insure against steep losses and guaranteeing their debt to stop the credit crunch pushing the economy into a deep slump. The government has already announced it will spend billions of pounds to rescue banks and to try to stop the economy falling into a deep recession.
The weak British economy and deep cuts in interest rates have led to a sharp fall in the value of sterling against the euro. In 1976, the British government was forced to ask the IMF for help after a slump in the value of sterling. (Reuters)