IMF may be on path to revival through money crisis

WASHINGTON: The global financial turmoil may revive the International Monetary Fund's role as the world's financial firefighter, providing loans to cash-strapped countries and developing an early warning system to prevent future crises.

Seeking a greater role for his 185-nation organization, Dominique Strauss-Kahn, the ambitious French leader of the IMF, has embraced enthusiastically a mandate to use its resources and skills to play a central role in the global economy.

He says he is ready to begin an immediate overhaul of the fund.

Meanwhile, as major powers ponied up USD 3 trillion last week to start bringing order to the global economy, Iceland, Hungary and Ukraine indicated they might seek financing from the IMF to improve their particularly dangerous fiscal maladies.

In recent years the IMF has been relegated to the sidelines with its loan portfolio diminished as well as its role on the international stage. Many countries that had been borrowers sought funds in capital markets and built huge reserves so they would not have to come hat in hand to the IMF.

In addition, China and other wealthy countries have provided loans to developing countries, many in Africa, with no strings attached.

Founded in the aftermath of World War II , the IMF became the international community's fire brigade in the 1990s, providing loans to countries in financial trouble from Thailand to Turkey, while requiring dire belt-tightening measures.