The International Monetary Fund has said the agency’s various efforts, including large and “timely financing”, have helped many of the emerging markets tackle the financial turmoil.
Asserting that many nations, which received IMF funds, have generally avoided banking crises, the multilateral lending agency said fiscal policy in many instances was adjusted in accordance with evolving conditions.
“The Fund-supported programmes are delivering the kind of policy response and financing needed to help cushion the blow from the worst crisis since the 1930s,” the agency said in its ’Review of Crisis Programmes’ covering 15 countries.
In recent months, IMF has sanctioned billions of dollars to many countries to boost their efforts to tide over the financial storm.
“Serious challenges remain, especially restoring sustained growth in output and employment, but there are encouraging signs of stabilisation,” IMF’s Managing Director Dominique Strauss-Khan said.
The report said the “general avoidance of banking crises in programme countries thus far is remarkable,” especially as many countries in Central and Eastern Europe, slipped into such a turmoil due to an “externally-financed credit boom“.
The countries covered in the review are Armenia, Belarus, Bosnia & Herzegovina, Costa Rica, El Salvador, Georgia, Guatemala, Hungary, Iceland, Latvia, Pakistan, Mongolia, Romania, Serbia and Ukraine.
Apart from “large and timely financing”, the lender said that more focused conditionality and stronger country ownership helped in avoiding many of the past problems in tackling the crisis.
According to the report, large financial packages were mobilised and that financing has been used more to meet actual funding constraints of the private and public sectors, as compared to replenishing central bank reserves.
However, the report noted that many challenges including unwinding of stimulus packages and fixing the balance sheets of banks, still remain.
"... Major challenges remain, including the timely unwinding of fiscal and monetary stimulus, adjustment to external competitiveness factors and fixing bank balance sheets,” it added.