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04.03.2009 International

Poor being hit by crisis says IMF


The world's poorest countries are beginning to be hit by the global financial crisis, warns the International Monetary Fund (IMF).

And they are likely to need $25bn (£18bn) in additional financing this year, the organisation says.

The IMF describes it as the "third wave" of the downturn; after first affecting the advanced and then the emerging economies.

And it is calling on donor countries not to cut back on their support.

In a new report, the IMF says poor countries face greater exposure to the current crisis because they are more integrated into the international economy than they used to be.

They are likely to feel the impact through a downturn in trade and falls in foreign investment and remittances - money sent home by people working abroad, the fund adds.

Humanitarian crisis
The report says more than 20 countries, half of them in Sub-Saharan Africa, are particularly vulnerable.

It warns that if "global growth and financing conditions deteriorate further, the number of vulnerable countries could almost double".

And that would increase the additional amount of money countries need towards $140bn, the study predicts.

"After hitting first the advanced economies and then the emerging economies, a third wave from the global financial crisis is now hitting the world's poorest and most vulnerable countries," the head of the IMF, Dominique Strauss-Kahn, says.

"This puts at risk the major achievements of higher growth, lower poverty, and greater political stability that many low-income countries have made over the past decade."

Mr Strauss-Kahn called on donor nations to provide the financing required in order to "prevent a humanitarian crisis".

The IMF, which represents 185 nations, says it has already increased its support to low income countries in the last year and it is ready to provide more.

But the amount is still relatively low, our economics correspondent Andrew Walker says.

And the IMF has made larger commitments to mainly middle income countries that are more directly affected by the financial crisis, our correspondent adds.