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Worst of crises yet to come
By siliconindia
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Tuesday, 25 November 2008, 20:30 IST |
2 Comments
Zurich: Oliver Blanchard, the International Monetary Fund's chief economist, has warned that the global financial crunch is set to deteriorate further and the situation is not expected to perk up until 2010.
According to a report, Blanchard also cautioned that the institution did not have the resources to solve every economic problem. He further added that the worst was yet to come and it will take a long time before the situation becomes normal.
The IMF also promised to help Latvia deal with its economic crisis after it assisted Iceland, Hungary, Ukraine, Serbia and Pakistan. However, Blanchard said that the institution was unable to solve all financial problems, particularly liquidity problems, adding that IMF alone cant counter them.
He also urged central banks around the world to cut interest rates, after the Swiss National Bank made a surprise one percentage point rate cut. The central banks "should lower interest rates to as close to zero as possible," he said.
Blanchard further explained that massive withdrawals of investments from emerging countries could represent hundreds of billions of dollars. "We do not have this money. We never had it," he said.
The IMF had spent a fifth of its 250 billion dollar (200 billion euro) fund in the last two weeks