Oct. 29 (Bloomberg) -- The International Monetary Fund approved an emergency loan program that almost doubles borrowing limits for emerging market countries and waives demands for economic austerity measures.

The 24-member executive board -- representing the 185 nations of the fund -- signed off today on the plan aimed at preventing the collapse of developing nations struggling to access international capital markets. The loans are for ``temporary liquidity problems,'' the IMF said.

Managing Director Dominique Strauss-Kahn's expedited funding to emerging markets represents an unprecedented effort by the IMF, which typically negotiates loans that include specific policy conditions on a case-by-case basis. Only countries in good standing with the IMF qualify for the program, he said.

``It's designed for countries having a track record of sound policies,'' Strauss-Kahn said at a press conference in Washington. ``The fund is ready to make its contribution to the resolution of the financial crisis.''

The lending arrangement will offer so-called hard-currency loans with terms of three months that wouldn't carry ``conditionality,'' Strauss-Kahn said, referring to the usual fund demands for policy changes. Under the new program, countries would be able to borrow as much as 500 percent of their quota -- the capital they agree to contribute to the IMF, he said.

IMF loans typically have terms of three and five years, and the fund has about $209 billion available to help emerging markets.

Brown's Call

U.K. Prime Minister Gordon Brown yesterday called on countries with large currency reserves such as China and oil-rich states to donate to the IMF.

Strauss-Kahn indicated today that the financial crisis will stretch the fund's resources.

``Do you know anybody not needing money?' he said at the press conference. ``In the crisis we're living with now, we probably will need'' more money because problems may spread from liquidity shortages to balance-of-payments gaps to slower economic growth, he said.

Simon Johnson, a former IMF chief economist, said the fund has the option to tap an additional $35 billion to $50 billion from rich countries. The IMF may need to go beyond that total to meet the demand for loans, he said.

``If we are really facing the problem I think we are, you need about $1 trillion,'' Johnson said.

Demand for the fund's loans -- which had dried up over the past five years as developing nations boomed -- is now soaring. Hungary, Ukraine, Belarus, Iceland and Pakistan have all announced this month that they are seeking financial support from the IMF.

To qualify for the IMF's ``Short-Term Liquidity Facility,'' countries must have been assessed by the IMF ``very positively'' on their recent economic policies, the fund said in a statement. Asked specifically about Argentina's eligibility, Strauss-Kahn said the country wouldn't qualify for the new program because it doesn't meet that standard.

To contact the reporters on this story: Christopher Swann in Washington at cswann1@bloomberg.net;

Last Updated: October 29, 2008 17:24 EDT