Poor being hit by crisis says IMF

The world's poorest countries are beginning to be hit by the global financial crisis, warns the International Monetary Fund (IMF).

• And they are likely to need $25bn (£18bn) in additional financing this year, the organisation says.
• The IMF describes it as the “third wave” of the downturn; after first affecting the advanced and then the emerging economies.
• And it is calling on donor countries not to cut back on their support.
• In a new report, the IMF says poor countries face greater exposure to the current crisis because they are more integrated into the international economy than they used to be.
• They are likely to feel the impact through a downturn in trade and falls in foreign investment and remittances – money sent home by people working abroad, the fund adds.
• The report says more than 20 countries, half of them in Sub-Saharan Africa, are particularly vulnerable.
• It warns that if “global growth and financing conditions deteriorate further, the number of vulnerable countries could almost double”.
• And that would increase the additional amount of money countries need towards $140bn, the study predicts.
• “After hitting first the advanced economies and then the emerging economies, a third wave from the global financial crisis is now hitting the world’s poorest and most vulnerable countries,” the head of the IMF, Dominique Strauss-Kahn, says.
• “This puts at risk the major achievements of higher growth, lower poverty, and greater political stability that many low-income countries have made over the past decade.”
• Mr Strauss-Kahn called on donor nations to provide the financing required in order to “prevent a humanitarian crisis”.
• The IMF, which represents 185 nations, says it has already increased its support to low income countries in the last year and it is ready to provide more.
• But the amount is still relatively low, our economics correspondent Andrew Walker says.
• And the IMF has made larger commitments to mainly middle income countries that are more directly affected by the financial crisis, our correspondent adds.