The UK’s finance minister yesterday urged EU nations to boost IMF resources to aid the fragile world economy, saying the UK would pledge up to an extra US$11 billion.
British Chancellor Alistair Darling also said there should not be “any let-up in the reform of the finance sector” in the wake of the global crisis, including on the controversial issue of pay and bonus structures for executives.
Darling’s comments come ahead of a meeting of G20 finance ministers later this week in London, before a summit of the world’s biggest economies in September in Pittsburgh, Pennsylvania, which will discuss the issue of bankers’ bonuses.
Writing in the Guardian, Darling said G20 world leaders agreed at the meeting in London in April to boost the IMF’s available lending resources to US$750 billion.
“European Union countries have agreed to provide US$100 billion [to the IMF],” Darling said in the newspaper.
“But Europe should set an example and do more to meet the target, by committing up to US$175 billion — with the UK ready to provide up to an additional US$11 billion, taking our total contribution to over US$26 billion,” Darling said.
The Guardian said the extra funding from the UK, to help the IMF assist low-income countries recover from the crisis, would be announced today.
Darling said he still expected the UK — suffering one of the worst recessions in decades — to return to growth “round the turn of the year.”
Risks to the global economy remain, however, and “Britain will continue to lead international action” to help secure its recovery, he said.
“Nor can there be any let-up in the reform of the financial sector. Every country must continue to put their banks on a sound footing,” he said. “Restoring public confidence, as well as ensuring the future stability of the sector, requires us to go further on pay and bonuses.”
He said: “Banks have to realize that the taxpayer came to their rescue for a purpose. That purpose was to get credit going again, not to fund rewards for excessive risk-taking which had such disastrous consequences.”
“Bankers forget that at their peril,” Darling said.
Excessive risk-taking, resulting in massive bonuses for bankers, has been blamed for helping spark the global financial crisis that led to multi-billion dollar government bailouts of world banks.
Although applauding a deal between the UK and Liechtenstein, Darling said more also needed to be done to clamp down on tax havens.
Liechtenstein raised the gate on its tax-haven fortress earlier this month, making a deal enabling the UK to snare about 5,000 British accounts holders with up to £3 billion (US$4.8 billion) in secret deposits.
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