Wed, Apr 18, 2012 - Page 10 News List

IMF seeking trimmed US$400bn rise in funds

Reuters and AP, MILAN, ITALY, and TOKYO

The IMF hopes to gain governments’ agreement this week to raise its funds by more than US$400 billion, about two-thirds of the amount it said it would need three months ago, IMF Managing Director Christine Lagarde signaled yesterday.

Lagarde, who had already signaled the fund would need less than previously thought, said the success of some countries in raising funds on financial markets in the first quarter had eased the pressure on its crisis-fighting resources.

In an interview in yesterday’s Il Sole 24 Ore daily, she praised reform efforts by Italy’s government and said market confidence had improved since Rome agreed to enhanced surveillance by the IMF. She also saw progress in Spain.

“I really hope this week we’ll reach the critical mass of more than [US]$400 billion. We are determined to do all we can,” she was quoted as telling Italy’s main financial newspaper, though she also said finally sealing the funds might take a bit longer.

Finance chiefs meet in Washington on Friday and Saturday.

“I am ready to leave the matter open for a few weeks: Some countries need a little bit more time for parliamentary approval,” she added.

Yesterday, Japan pledged US$60 billion in loans to IMF in an effort to ensure that the debt crisis in some European economies will not spread.

Japanese Minister of Finance Jun Azumi announced the emergency loan, which would use the nation’s foreign-exchange reserves, his ministry said.

Lagarde welcomed the move and encouraged other fund members to do the same.

“This is an important step forward in the ongoing international effort to strengthen the adequacy of the global resources available to prevent and fight crises and to promote global economic stability,” Lagarde said in a statement.

The yield on Spain’s benchmark 10-year government bond jumped above 6 percent on Monday for the first time since November last year. Rising yields are a sign that investors are less confident in the country’s finances.

“We can never be optimistic about the situation in Europe, even though the area is almost set to exit the crisis, thanks to policy efforts,” Azumi was quoted by Kyodo News as saying.

In the interview, Lagarde said credit-crunch risks had receded.

“The overall risk evaluation is unchanged, but it’s April now and some countries have already raised on the markets more than half of what they need for 2012, so our estimate has shrunk,” she said. “In some countries, for small and medium enterprises, for households, credit may be more costly and difficult, but it is not as serious a threat as we feared in December.”

Lagarde said the IMF would keep pressing for the eurozone’s rescue funds to be allowed to lend directly to banks, to address the link between lenders and sovereign risk.

“I put the idea forward in July, it was not accepted. We insist,” she said.

This story has been viewed 1837 times.
TOP top