Eurozone ministers agreed on Monday to boost IMF resources by 150 billion euros (US$195.6 billion) to ward off the debt crisis and won support for more money from EU allies, but it was unclear if the bloc would reach its 200 billion euro target after the UK bowed out.
Following a three-hour conference call, EU finance ministers said currency zone outsiders the Czech Republic, Denmark, Poland and Sweden would also grant loans to the IMF to help save the 17--nation zone.
However, the EU said those lenders must first win parliamentary approval, while the UK made it clear it would not participate in the plan.
That leaves the eurozone more reliant than ever on major economies such China and Russia, which have shown a willingness to lend more to the IMF. The US for its part is concerned about the lender’s exposure to the eurozone.
Ministers had set an informal deadline of Monday to arrive at the 200 billion figure, which was agreed by EU leaders at a summit on Dec. 8 and Dec. 9 and urged other nations to take part.
“Euro area member states will provide 150 billion euros of additional resources through bilateral loans to the fund’s general resources account,” the EU finance ministers said in a joint statement after their call.
“The EU would welcome G20 members and other financially strong IMF members to support the efforts to safeguard global financial stability by contributing to the increase in IMF resources,” the statement said.
British Treasury sources said the UK had decided not to contribute to an increase IMF resources.
“We were clear that we would not be making a contribution,” one Treasury source said, while another added that there was “no agreement on the 200 billion” euro funding boost.
However, the EU was more diplomatic, saying in its statement that London would take a decision on the issue early in the new year in the framework of the G20 economies.
The increase in IMF resources is seen as one pillar in a multi-pronged strategy to strengthen the eurozone’s fire-fighting capability and build better defenses for the future. Another pillar is making the eurozone’s existing bailout fund, the European Financial Stability Facility (EFSF), more flexible in how it tackles the debt debacle.
Speaking during testimony to the European Parliament, European Central Bank (ECB) President Mario Draghi praised EU efforts to forge a new “fiscal compact” as a solid base for responding to the crisis and called the euro an “irreversible” project.
“I have no doubt whatsoever about the strength of the euro, about its permanence, about its irreversibility,” he said. “You have a lot of people, especially outside the euro area, who really spend a lot of time in what I think is morbid speculation, namely, what happens if? And they all have catastrophic scenarios for the euro area.”
However, he said bond market pressure on the eurozone would be “very significant” in the first quarter, with about 230 billion euros of bank bonds, up to 300 billion in government bonds and more than 200 billion euros in collateralized debt all maturing.
“The pressure that bond markets will be experiencing is really very, very significant, if not unprecedented,” he said.
Draghi spoke while EU ministers were still on their conference call, with discussions also looking at issues surrounding the eurozone’s permanent bailout fund, with Finland unhappy about plans to weaken the unanimity rule governing how the European Stability Mechanism (ESM) is run.
Finland’s opposition, if it is not overcome, could scupper efforts to bring the ESM into force in July next year, a year earlier than was originally planned, to step up -crisis-fighting efforts.
However, the primary focus of debate was about the increase in IMF resources, with concerns growing that the EFSF is insufficient to handle the debt problems and with too long to wait until the permanent mechanism is up and running.
While EU leaders agreed at their last summit on the desire to boost IMF resources, there are doubts about whether the scheme will work, with not just London and Washington unenthusiastic, but Germany’s Bundesbank too.
“Washington cannot make bilateral loans available to the IMF without Congress approving it,” German Finance Minister Wolfgang Schaeuble told German radio. “There’s no chance of that and the American government has always made that clear.”
EVOLVING SITUATION: Of the latest cases, 23 percent were found to be asymptomatic, but the coronavirus strain in Da Nang is more contagious, authorities said A COVID-19 outbreak that began in the Vietnamese city of Da Nang more than a week ago has spread to at least four city factories with a combined workforce of about 3,700, state media reported yesterday. Four cases were found at the plants in different industrial parks in the central city that collectively employ 77,000 people, the Lao Dong newspaper said. Vietnam, praised widely for its decisive measures to combat the novel coronavirus since it first appeared in late January, is battling new clusters of infection having gone for more than three months without detecting any domestic transmissions. Authorities yesterday reported one new
‘COVIDIOTS’: Politicians condemned the protest that came amid surging infections in the country, while a marcher said government-induced fear weakened the body Loudly chanting their opposition to masks and vaccines, thousands of people on Saturday gathered in Berlin to protest against COVID-19 restrictions before being dispersed by police. Police put turnout at about 20,000 — well below the 500,000 organizers had announced as they urged a “day of freedom” from months of virus curbs. Despite Germany’s comparatively low toll, authorities are concerned at a rise in infections over the past few weeks and politicians took to social media to criticize the rally as irresponsible. “We are the second wave,” shouted the crowd, a mixture of hard left and right and conspiracy theorists, as they converged
A cat that went missing on a family holiday on the shores of Loch Lomond, Scotland, has been identified 12 years later. Tortoiseshell-and-white Georgie spent October half term in 2008 with her owners at the Rowardennan campsite, but vanished as they were due to return home to Greater Manchester, England. After a search of the site the Davies family departed without Georgie, hoping the three-year-old microchipped feline would be located by someone. Over the intervening 12 years, she remained close to the Queen Elizabeth Forest Park site, being fed and cared for by campsite staff and holidaymakers. After the COVID-19 pandemic hit and lockdown
Three Micronesian sailors stranded on a remote Pacific island have been found alive and well after a rescue team spotted their giant SOS message written into the sand on a beach. Australian and US military aircraft found the three men on tiny Pikelot island, nearly 200km west of where they had set off. Rescuers said that the men were “in good condition” with no significant injuries. The men had been missing for three days after their 7m skiff ran out of fuel and strayed off course. Authorities in the US territory of Guam raised the alarm on Saturday after the men failed to complete