International Monetary Fund

The International Monetary Fund cut its 2008 forecast for world growth Tuesday, saying the global economy will deliver the weakest performance in five years as U.S.-originated financial strains intensify. The IMF said no country would escape fallout from the crisis in the U.S. sub-prime mortgage market, where loans made to less creditworthy borrowers were packaged into securities by Wall Street firms and sold around the world.

Leaders from the world's smaller, less-developed countries joined Saturday in pledging to support efforts by the United States and other major nations to halt the global financial crisis, despite worries that their own economies may suffer.

Pakistan has sought help from the International Monetary Fund to avoid a possible economic meltdown brought on by high fuel prices, dwindling foreign investment and soaring militant violence. Pakistani officials had said turning to the IMF to avoid defaulting on billions of dollars of government bond payments due in the coming months would be a last resort.

Pakistan has agreed to borrow $7.6 billion from the International Monetary Fund in an effort to stabilize the economy of this strategically important U.S. ally on the front lines of the battle against Al Qaeda and the Taliban. The government had been reluctant to go to the IMF but had little choice once even its close allies -- the United States, China and Saudi Arabia -- snubbed its pleas for significant bilateral aid.

Venezuela will withdraw from Washington-based lending organizations the IMF and World Bank in a symbolic move that distances the nation's leftist president, Hugo Chavez, from much of the international economic community. Chavez plans to create an alternative lending bank run by South American nations and funded in part with his OPEC nation's high oil revenue.

International Monetary Fund Managing Director Rodrigo de Rato said he would step down in October, about six weeks after upheaval at the helm of the fund's sister institution, the World Bank. "My family circumstances and responsibilities, particularly with regard to the education of my children, are the reason for relinquishing earlier than expected my responsibilities at the Fund," he said in a statement to the board of the 185-nation lending institution.

Global economic instability stemming from credit market turmoil in the U.S. is "likely to be protracted," the International Monetary Fund said Monday, five months after predicting little chance of a "major dislocation." "The potential consequences of this episode should not be underestimated," the IMF said in its Global Financial Stability Report, released in Washington.

Iraq has cleared its debts with the International Monetary Fund by repaying about $470 million earlier than required, the IMF said Friday. "Iraq's ability to repay the IMF ahead of schedule reflects its strong international reserve position against a background of high oil prices," IMF Managing Director Dominique Strauss-Kahn said in a brief statement. The IMF lent Iraq the money as emergency post-conflict assistance in 2004, a year after the U.S.-led invasion toppled Saddam Hussein.

Clearly irritating U.S. economic officials, the International Monetary Fund faulted the United States on Wednesday for its budget and trade deficits and its failure to provide universal health insurance, predicting that the dollar would inevitably decline in value against the world's other currencies. In its semiannual report on the world economic outlook, the IMF painted a generally rosy picture, with the global economy growing by 4.9% in 2006.

The International Monetary Fund won new powers to police the world economy after its 184 member countries endorsed a framework to monitor how the economic policies of one country affects others. The countries, represented by finance ministers or central bank governors, also agreed that some emerging economies needed more say in IMF decision-making. "We resolve to make the IMF more fit for purpose in a global economy," said Gordon Brown, Britain's finance minister.