IMF works fast to dole out money around the world

— -- Not long ago, the International Monetary Fund had a problem that bankers don't normally face: It had lots of money and no one to lend it to.

That isn't a problem any more.

In the past week, the IMF has doled out $25 billion to Hungary, $16 billion for Ukraine and more than $2 billion for Iceland. More loans are coming.

IMF officials are negotiating with Pakistan over another significant rescue package. And Managing Director Dominique Strauss-Kahn earlier this week unveiled a short-term loan program meant to get money quickly to well-managed countries that temporarily run short of cash.

Earlier this year, developing countries, boasting sober policymaking and ample financial reserves, seemed to have outgrown the IMF. Now, the much-vilified lending body is back in vogue. "Even compared to 10 years ago, the world is more integrated today. So the spillover effects by definition are bigger and affect more people," says Ted Truman, a former U.S. Treasury Department and Federal Reserve economist. "The more globalized the world, the more you need the fund."

The Washington, D.C.-based IMF is readying up to $100 billion in novel, three-month loans for countries with sound policies and manageable debts. Countries such as Colombia, Chile, Poland and India are among those that would likely be eligible. The money would be released quickly and without the onerous conditions that have made countries reluctant to tap the IMF in recent years.

Simon Johnson, who recently stepped down as the IMF's chief economist, says up to 20 countries eventually may require fund help. But the IMF only has about $250 billion available for all lending — not enough in a world of massive cross-border capital flows.

"It needs a lot more money. … Ten times more money than it has," Johnson says.

The fund is unlikely to actually run out. Member countries could give more, or the IMF might be able to tap countries with financial surpluses, such as China or Saudi Arabia.

The fund's resurgence may continue. World leaders are scheduled to meet in Washington Nov. 15 for a financial summit, which could lead to a beefed up IMF mandate. European officials especially are keen to bolster the fund's global role, says Harvard University's Kenneth Rogoff, another former IMF chief economist.

"Chances are, the IMF's role will get strengthened," he said.