The International Monetary Fund announced additional steps to counter the global economic crisis at the World Economic Forum in Davos, as other major international financial institutions vowed to act decisively.
IMF Survey Magazine called the organization's decision to double its lending resources to $500 billion as the crisis deepens "a precautionary move." This follows IMF's latest assessment that the "global economy [will] come to a ‘virtual halt' as world growth is expected to plunge to 0.5 percent this year, the lowest rate since World War II.
At the World Economic Forum in Davos, John Lipsky, first deputy managing director, said that though IMF is adequately equipped with $250 billion at the moment, adding another $250 billion to contingent facilities is "prudent."
IMF Managing Director Dominique Strauss-Kahn had similar thoughts in January when he told Bloomberg that "demand may be above what we have," should the crisis take a turn for the worse in the coming months.
Those in international power and position seem to agree that it is essential to deal with the crisis aggressively and firmly. World Bank President Robert Zoellick has said this era should be remembered as the Age of Responsibility. His comments echoed U.S. President Barack Obama's words.
"How we respond to the crisis over the next few months will set the course," Zoellick said in an opinion piece published in Financial Times.
He further challenged leaders of the developed world at Davos to allocate 0.7 percent of their economic stimulus package to a "vulnerability fund" for developing countries to "signal a commitment that the world is choosing to define, rather than be defined by the crisis."
Barbara Stocking, chief executive of Oxfam GB, opined that world leaders should rise to the opportunity at the heart of the crisis, realign power relations and ensure that the future will not be marred by growing inequality.
World leaders who gathered Jan. 28 to Feb. 1 for the World Economic forum in Davos vowed to collaborate on global solutions. Whether they indeed do, whether IMF's "prudence" will pay off or the World Bank's call be heeded, are events that will play out before our eyes along with this crisis.
