IMF warns sustained high oil prices would hit growth

March 2, 2011 - 0:0
PANAMA CITY (Reuters) - The head of the International Monetary Fund warned on Monday that global economic growth could suffer if the price of oil stays at its current high level for an extended period. Oil prices jumped towards $120 a barrel last week for the first time since 2008 as a revolt against Libyan leader Muammar Gaddafi has hit crude exports from the country, which is the world's 12th largest producer. ""I am concerned,"" said IMF chief Dominique Strauss-Kahn, during a visit to Panama. ""The hike to something which is between $110 and $120 a barrel is something which may affect (growth) if it lasts too long."" At the same time, Strauss-Kahn said oil prices were not likely hitting growth yet. ""We are not there today,"" he said. Oil prices have eased in recent days, partly because top world exporter Saudi Arabia has promised to meet any shortages. Crude oil shipments from Libya are at a virtual standstill, shipping sources said on Monday. Gaddafi's forces have been trying for days to push back a revolt that has won over large parts of the military, ended his control over eastern Libya and is holding the government at bay in western cities near Tripoli. Strauss-Kahn said Panama, seen as a safe bet for sovereign bond investors, could be included in the IMF's safety net for emerging markets, known as the Flexible Credit Line. The IMF facility aims to be a backstop should investors sour on emerging markets or rush back into safe havens like U.S. Treasuries this year or next. ""There may be a high probability for Panama to qualify,"" Strauss-Kahn said, reiterating the IMF's policy that the credit is ""really strictly limited to our members having the right policy in place."" Mexico qualified for an extension of its credit line from the Washington-based lender in January.