I.M.F. adds $430 billion in emergency lending ability
Baku, April 22 (AZERTAC). The International Monetary Fund has raised at least $430 billion in extra lending capacity to be used if the euro zone crisis worsens or global financial conditions deteriorate, it said Friday afternoon.
The announcement came during the spring meetings of the I.M.F. and its sister institution, the World Bank. World leaders gathered in Washington to discuss how to jolt growth, reduce unemployment and poverty, and ensure financial stability around the world.
“We warmly welcome pledges by our members to increase I.M.F. resources by over $430 billion, almost doubling our lending capacity,” Christine Lagarde, the managing director of the I.M.F., said in a statement. “We made a call to action and our members have delivered.”
The new commitments come mostly from wealthy, developed economies: $60 billion from Japan; $15 billion each from Britain, Saudi Arabia and South Korea, and smaller amounts from countries including Sweden, Norway, Poland, Australia, Denmark and Singapore. Those sums will join about $200 billion in commitments previously made by euro zone countries.
But fast-growing, cash-rich emerging economies — including Brazil, China, Russia and India — chose not to make specific pledges at the spring meetings. They have indicated that they will contribute, Ms. Lagarde said, but they have not committed to certain dollar amounts. The countries are expected to name their precise contributions at a Group of 20 summit meeting in Mexico in June, after consulting with their governments at home.
Emerging countries have argued that they should win more voting power within the fund if they are going to contribute more financing. They have been vocally critical of continued American and European dominance over the I.M.F.
In prepared remarks to be delivered on Saturday, Guido Mantega, the finance minister of Brazil, castigated the fund for not moving quickly enough to enact quota changes made in 2010. And he argued that voting within the fund should be proportional to the countries` economic output, to give the organization greater legitimacy among all its members.
“The calculated quota share of Luxembourg is larger than the one of Argentina or South Africa,” his remarks read. “The quota share of Belgium is larger than that of Indonesia and roughly three times that of Nigeria. And the quota of Spain, amazing as it may seem, is larger than the sum total of the quotas of all 44 sub-Saharan African countries.”
An American official, speaking on the condition of anonymity to avoid disturbing diplomatic relations, said the new financing pledges were not expected to change the voting shares within the fund. The $430 billion in new commitments represent a temporary buffer in case the I.M.F. happens to need additional capacity in the coming years, the official said, not a change in permanent quota contributions.
The United States has said it will not pledge any more money to the fund, arguing that Europe`s problems are its own to fix and that the I.M.F. has enough spare lending capacity at the moment. “Europe is a rich continent,” Timothy F. Geithner, the Treasury secretary, said in remarks at the Brookings Institution this week Europe has to play the “the dominant financial role” in its own crisis, he argued.
Other news in this section
