Caribbean to benefit from IMF multibillion-dollar injection

The International Monetary Fund (IMF) has announced a US$250 billion injection into the global economy that could benefit Caribbean countries, according to a report on www.cananews.net.



The Washington-based financial institution said the money will help bolster the reserves of countries, including those in the region, as part of measures to combat the world economic crisis.



Almost US$100 billion of the new allocation will go to emerging markets and developing countries, of which low-income countries, such as the Caribbean, will receive over US$18 billion, the bank said.



\"The Special Drawing Rights (SDR) allocation is a key part of the fund\'s response to the global crisis, offering significant support to its members in these difficult times,\" said IMF Managing Director Dominique Strauss-Kahn.



The SDR allocation was requested as part of a US$1.1 trillion plan agreed at the Group of Twenty (G-20) summit of industrialized and emerging market countries in London last April.



It was endorsed by the International Monetary and Financial Committee (IMFC) to tackle the global financial and economic crisis by restoring credit, growth, and jobs in the world economy.



The IMF said the SDR allocation will be effected on August 28, if approved by its Board of Governors, which has an 85 per cent majority of the total voting power. The vote is scheduled to close on August 7.



\"The allocation is a prime example of a cooperative monetary response to the global financial crisis,\" Strauss-Kahn said.



The IMF said while the global economy is beginning to pull out of a recession, unprecedented in the post World War II era, stabilisation is still uneven. It also said the recovery is expected to be sluggish.



The bank, however, said financial conditions have improved more than expected, owing mainly to public intervention, pointing to recent data that suggested that the rate of decline in economic activity is moderating, although to varying degrees among regions.



The IMF\'s April 2009 World Economic Outlook (WEO) projected that economic growth during 2009-10 will be about ½ percentage points higher, reaching 2.5 percent in 2010.



\"But despite some positive signs, the global recession is not over, and the recovery is still expected to be slow, as financial systems remain impaired, support from public policies will gradually diminish, and households in countries that suffered asset price busts will rebuild savings,\" the IMF said.



To combat the crisis, the IMF said it has increased lending and is raising additional money.



Besides the SDR allocation, it said it is in the process of raising new resources for its lending activities in response to an associated G-20 request to treble the fund\'s resources to US$750 billion to underpin its lending activities.



The IMF said it has signed new borrowing arrangements with Japan, Canada and Norway enabling it to mobilise more than US$100 billion.



In addition, it said it has created a new framework for issuing notes to interested members, which would allow it to raise further resources as required.