KEY POINTS:
The International Monetary Fund is drawing up emergency plans for a new short-term loan facility for governments facing a cash squeeze as a result of the turmoil in the financial markets.
Iceland is already in line for a US$2 billion ($3.58 billion) IMF bail-out, and a queue of other hard-hit countries, including the Ukraine, Belarus and Hungary, are also in negotiations with teams from the Washington-based lender.
But there is growing concern among some of its members that the financial chaos is now so severe healthy countries could also be driven to the brink of financial collapse.
Ashok Bhundia, new markets economist at Goldman Sachs, said new bail-outs would be likely to have tough strings attached.
- OBSERVER
