UPDATE 1-Russia's Kudrin says emerging markets now need help

(Adds Kudrin quotes, details)

By Gleb Bryanski

WASHINGTON, Oct 12 (Reuters) - Russia's Finance Minister Alexei Kudrin said on Sunday developing economies were now feeling the impact of the credit crisis sweeping the globe and he called for a quick IMF action to help them.

Many emerging economies had hoped to ride out the global financial storm arguing their countries can "decouple" from the United States and the euro zone and maintain high growth rates, but the latest wave of the crisis crushed such hopes.

"The developing countries are already caught in the whirlwind of the global financial crisis," Kudrin said in a speech at the Institute of International Finance's annual meeting.

"We need to use the IMF's reserves to support countries which do not have large forex reserves like Russia has. We will be able to handle our problems but some of our neighbors face similar problems and lack resources," Kudrin told reporters.

Kudrin, who criticized the International Monetary Fund for a slow response to the 1998 financial crisis, said the fund should stand ready to act quickly and with simple mechanisms. Kudrin did not say which Russia's neighbors needed immediate help.

He said the IMF's forecast Russian economic growth of 5.5 percent next year was too "optimistic," adding: "On growth, the next two months will show the real picture."

Both the G7 group of rich countries and the larger G20, which includes Russia, China, India and other emerging economies, vowed this weekend in Washington to take action to stem a financial crisis that has roiled stock markets and hurt growth, but they did not announce detailed plans.

NO FREE LUNCH

Kudrin said the decisions have set the stage for action by individual governments, which should now decide the scope for concrete measures.

"The decisions may seem too general from first glance, but they strictly define areas of risk, and the scale of concrete decisions should be decided by individual governments for each economy," Kudrin said.

During the weekend meeting in Washington, Kudrin took part in discussions about the crisis at a dinner with financial officials from the G7 -- the United States, Britain, Canada, France, Germany, Italy and Japan -- despite earlier calls to exclude Russia from such meetings as a punishment for the war in Georgia.

Russia sent tanks to Georgia in August after Georgia tried to retake a breakaway province, drawing condemnation from Western leaders for disproportionate use of force.

Kudrin said "discussions over our policy including the events in Georgia," did not affect his agenda in Washington where financial leaders had sought to show unity in the face of the crisis.

In a clear bid to demonstrate how it can contribute to efforts to stem the panic, Russia will hold bilateral loan negotiations with tiny Iceland, whose economy is teetering on the brink of collapse, next week.

Kudrin said Russia, the holder of the world's third largest foreign exchange reserves, which wrote off $35 billion of debt to poor countries in the last five years, was ready to give Iceland a helping hand but that its generosity had its limits.

"There should not be a free lunch," Kudrin said when asked whether reserve holders have an obligation to provide help to countries hit by the crisis. He said apart from Iceland no other country had asked Russia for assistance. (Reporting by Gleb Bryanski; Editing by Tim Ahmann)