Emerging nations need up to $900 bln reserves: IMF

WASHINGTON (Reuters) - The International Monetary Fund on Tuesday estimated reserve needs of emerging countries, outside China and oil producers, could reach between $400 billion and $900 billion over the next five years as countries rebuild from the global financial crisis.

The IMF also said reserve needs of a group of 118 emerging market countries it sampled, excluding China and rich oil exporters, could be somewhere between $1.3 trillion and $2 trillion over the next 10 years.

"There is a potential for even greater future demand for reserves than estimated," the IMF warned, saying its estimates assumed there would be no further hemorrhaging of reserves beyond 2009.

"Coming out of the crisis, many countries may in fact desire to have even more reserves buffers and protection, not least because crises are recurring events," it added.

The estimates were included in an IMF report published on Tuesday outlining a staff proposal to allocate $250 billion in IMF special drawing rights, created by the IMF in 1969 as an international reserve asset, to the Fund's 186 member countries to boost global liquidity.

The proposal was approved by the IMF board on July 20 and the allocation could be made by the end of August following a vote by member countries.

In the staff report, the IMF said international reserves had been substantially drained as governments have tried to protect their economies from the impact of the crisis and global recession. Future needs to rebuild reserve levels will be "large," it said.

Several countries have sold reserves to boost foreign currency liquidity, while others have provided foreign exchange facilities to help the private sector cope with a global credit squeeze and dramatic drop in private capital flows.

The Fund said net private capital inflows to developing countries are projected to contract by $100 billion in 2009.

"Risks to capital flows are likely to remain until financial stability is restores, which may take time," the IMF added.