EU governments promised to lend Hungary USD 8.1 billion as part of a USD 25 billion international rescue package to help it weather a financial crisis that has sharply devalued its currency. The EU’s 27 finance ministers and the European Commission said in a statement that they would join with the International Monetary Fund and the World Bank in helping Hungary. The IMF will give USD 15.6 billion and the World Bank another USD 1.25 billion, they said. In return for the loan, the EU executive said Hungary had made a “strong commitment” to prudent budget policies that include reducing debt and the yearly budget deficit. It did not give details.
The German Foreign Minister, Frank-Walter Steinmeier, has said that Pakistan has just “a few days” to raise billions of dollars in foreign loans. After meeting senior members of the government, he said Oct. 28 that Pakistan had no choice but to seek a loan from the IMF. Steinmeier said that the loan was needed to avoid a deepening crisis. “I hope the decision (with the IMF) will be taken soon. It won’t help to have it in six months, or six weeks. Rather, we need it in the coming six days,” Steinmeier said at a joint news conference with his Pakistani counterpart, Shah Mehmood Qureshi. Economists say that the country needs up to USD 15 billion over the next 24 months to stabilize the economy.
The IMF early this week announced an outline USD 16.5 billion loan agreement with Ukraine, which is struggling to restore confidence in a shaky banking system and sliding currency damaged by the global financial crisis. The loan to Ukraine, which has yet to be approved by the IMF’s executive board, comes amid negotiations between the Fund and a string of other countries around the world suffering from the spreading impact of the credit crisis, including Iceland, Hungary and Pakistan. On Friday, Iceland secured a USD 2 billion loan from the IMF, the first western country to do so in three decades.
Some South American countries on Oct. 27 called for a profound and all-round reform of the international financial system. Foreign and finance ministers and central bank governors from member countries of the Common Market of the South (Mercosur) economic bloc attended a one-day emergency meeting in Brasilia, Xinhua reported. In a statement issued after the meeting, representatives of the Mercosur members underlined the necessity to reform the current international financial system. Globally, it needs to set up ‘instruments that allow concrete, immediate and more adequate responses to economic crisis,’ said representatives of the Mercosur countries.
The World Bank and the French Development Agency (AFD) will loan China more than USD 900 million for reconstruction of areas devastated by the May 12 earthquake. Officials from the two organizations made the announcement Sunday at the ongoing EU-Sichuan Investment and Cooperation Conference in Chendu, capital of southwestern Sichuan Province, which was hardest-hit by the 8.0-magnitude quake. The World Bank planned to provide an emergency recovery loan of USD 710 million. Part of the money, USD 510 million, will be allocated to Sichuan.
The Ghanaian government, backed by the World Bank, is expanding a cash handout program to help families hit hardest by global food price hikes. But some local development experts question whether the approach has lasting benefits. Government officials say the initiative expands a cash transfer program begun earlier this year, and aims to help subsistence farmers already reeling from natural disasters when food and fuel prices spiked. Some say the program, known as Emergency Livelihood Empowerment Against Poverty (LEAP), does not live up to its name of empowering poor communities.