IMF talks to borrow $100 billion from Japan almost completed

Kyodo

The International Monetary Fund is close to completing its talks to borrow $100 billion from Japan, IMF Managing Director Dominique Strauss-Kahn said.

“The Japanese already pledged $100 billion and I’m really thankful to the Japanese government to take the lead” in helping the IMF improve its financial standing, he told a news conference Monday.

“We are discussing with them to finalize technical details of this agreement, but almost done,” the IMF chief said. “I hope other countries will follow.”

Prime Minister Taro Aso unveiled Japan’s intention to lend a maximum of $100 billion to the IMF to help the Washington-based lender keep assisting financially troubled countries.

The IMF has sought to double its lending ability to some $500 billion to boost confidence that it can take care of any future borrowers amid the financial crisis, in addition to recent borrowers, including Pakistan, Iceland and some Eastern European nations.

Strauss-Kahn also said China’s economy will grow 6 percent or 7 percent this year. He said it will be “possible” but “very challenging” for China to attain its 8 percent growth goal because it would require major policy changes, especially shifting the focus of growth to domestic demand and away from exports.

The IMF chief reiterated his institution’s view that the yuan is “still undervalued.” But he said the IMF’s immediate focus must be spurring growth, rather than urging Beijing to let its currency appreciate.

$3 billion fund

Japan and the World Bank have formally agreed to launch a $3 billion fund to recapitalize banks in poor nations so they can continue lending and buoy their economies battered by the ongoing global financial crisis.

Hiroshi Watanabe, chief executive officer of the Japan Bank for International Cooperation, and Lars Thunell, CEO of International Finance Corp., signed the accord in a ceremony at JBIC headquarters in Tokyo. JBIC will contribute $2 billion to the fund, while IFC will provide $1 billion.

IFC is a World Bank group member dedicated to promoting sustainable private-sector development in poor countries.