Sun, Dec 04, 2011 - Page 11 News List

US says it has no plans to lend money to the IMF

AFP, Washington

The US has no plans to lend money directly to the IMF, a senior Treasury official said on Friday, as the IMF pitches to boost its resources in the case of financial emergency.

The official, who would not be identified, said the US believed the IMF had enough resources for its needs.

Currently the IMF has US$389 billion available to lend to its member countries.

IMF managing director Christine Lagarde has said it needs to boost its resources to be able to cope with potential large-scale financial meltdown — with all eyes in recent months on Europe.

On Friday, IMF spokesman Gerry Rice said the IMF “will need more resources should the crisis deepen further,” suggesting one source could be bilateral loans from central banks, including the European Central Bank.

“The European authorities — like some other IMF member countries — are exploring bilateral loans to the IMF,” Rice said in a statement.

“As we have also noted, such loans could indeed come from member country central banks,” some of which are already lending to the IMF, he added.

Bilateral loans to the IMF could be turned around and lent on to countries in need, under the IMF’s strict conditions for fiscal probity.

Analysts believe that Spain and Italy, their finances deeply out of balance and markets pushing up their costs to borrow, could be in line for rescue packages from the IMF.

However, the IMF’s board, which is already suspicious of committing more money to the eurozone, would have to sign off on how any funds are used, including those from bilateral loans.

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