THE International Monetary Fund (IMF) needs more resources and better tools to help emerging economies deal with the spill-over from slowing growth and future interest rate rises in advanced economies, a Bank of England deputy governor said Tuesday.

    Minouche Shafik — who was a deputy managing director at the IMF before joining the BoE last year — said the current global safety net for emerging economies which faced a sovereign debt crisis was “fragile, costly and fragmented.”

    Global policymakers’ attention was turning to the risk of vulnerabilities in emerging economies, rather than rich-world banks, as growth slowed in less developed markets hurt by falls in commodity prices, Shafik said in a speech in Edinburgh.

    “Do fundamentally sound emerging market economies have access to the right (tools) to deal with the challenges posed by lower growth, falling commodity prices and potential spillovers from the possible exit of exceptional monetary policy in advanced economies,” she queried.

    The IMF urged the United States Federal Reserve not to rush into raising interest rates this month, due partly to the risk of volatility in emerging economies, some of which have already been affected by sharp falls in oil prices and China’s stock market in recent months.

    Shafik said the IMF needed more funding, and should consider working towards a system of short-term funding for countries hit by financial crises not of their own making, similar to what the BoE makes available to British banks.

    Such a plan would require closer monitoring of countries and a reduction of the stigma associated with accepting IMF aid, but would be cheaper than some emerging countries’ practice of building up vast foreign exchange reserves, she said.

    (SD-Agencies)