Global Credit Crisis Is Not Over Yet, IMF Chief Says

Cairo, Egypt (AHN) - Dominique Strauss-Kahn, the head of the International Monetary Fund, said on Monday that the global financial sector is likely to shrink due to deepening global credit crisis.

"The financial sector, not only in the US but also in the rest of the world, will be at the end of the crisis smaller than the financial sector today," he told reporters in Cairo on Monday during his visit to the country.

"The financial sector will shrink," he added, expecting "a phase of consolidation of the financial sectors."

He suggested that with the collapse of Lehman Brothers, the global financial firms are likely to feel its domino effect and experience its meltdown.

On early Monday, the 158-year-old firm, Lehman Brothers, announced that it will file for Chapter 11 bankruptcy protection, after lossing as much as $60 billion in slumping real-estate market.

Lehman has listed more than $613 billion of debt after it collapsed, which is larger than WorldCom Inc.'s failure in 2002 and Drexel Burnham Lambert's in 1990.

"What we see today with Lehman brothers is something that started months ago," Strauss-Kahn said in a statement.

He added, "The consequences on the financial sector are not over, and we are going to see more, [but] the causes are for a large part behind us."

Strauss-Kahn had visited Egypt to meet with President Hosni Mubarak and other officials and discuss the nation's economic reform program.