IMF Says It’s Ready to Help Nations Handle Capital Flows

The International Monetary Fund said it’s ready to provide aid to emerging markets facing capital flow volatility, touting precautionary funding that helped Mexico weather the global financial crisis of 2008-2009.

The IMF “is prepared to deploy its resources when requested to support its members, including in conjunction with regional financing arrangements,” the fund said in a twice-yearly report listing the main challenges for its member countries.

“Experience has shown -- for instance in the case of Mexico -- the benefits of timely mobilization of precautionary resources in times of heightened market volatility and uncertainty,” the fund said in the report.

The IMF and the World Bank this week urged nations from Turkey to Indonesia to strengthen their economies in preparation for the tapering of the Federal Reserve’s $85 billion-a-month asset-purchase program.

Bond prices slumped internationally and emerging-market stocks plunged after May 22, when Fed Chairman Ben S. Bernanke said for the first time the Fed could withdraw stimulus. While those market movements were partly reversed after the Fed maintained its policy last month, developing countries only have two to three months to prepare themselves, World Bank President Jim Yong Kim said on Oct. 10.

Mexico first sought IMF support in 2009 to bolster market confidence in its economy as the country sank into its deepest recession since the 1930s. Two other nations, Colombia and Poland, also established precautionary arrangements with the IMF under its new flexible-credit line, which is reserved for countries pursuing what the Washington-based lender considers strong economic policies.

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