The global response to the financial crisis in eastern Europe has been hamstrung because the International Monetary Fund is too small, former officials say.
Amid strains in emerging markets across the world and calls for the European Union to take the lead in rescuing countries such as Latvia, Hungary and Romania from collapsing banking systems and currency crises, the IMF has been scrambling to increase its firepower.
Simon Johnson, a former IMF chief economist at the Massachusetts Institute of Technology, said: ”œWe are seeing the consequences of the lack of IMF resources. Programmes are probably undersized because the IMF is worried about running out of money.”
The IMF last year provided $15.7bn (€12.4bn, £11bn) of a $25.1bn rescue programme for Hungary, but its resources are being rapidly depleted.
Ken Rogoff, another former chief economist, said: ”œThe IMF doesn’t have nearly the resources to backstop all of eastern Europe.”
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