WASHINGTON – The International Monetary Fund says it will boost its lending resources by $500 billion to avoid further contagion of the European financial crisis to the global economy.
“Based on staff’s estimate of global potential financing needs of about $1 trillion in the coming years, the fund would aim to raise up to $500 billion in additional lending resources,” an IMF spokesman said in a statement issued Wednesday.
But a senior Japanese official said Thursday that a boost in the lending resources should come only after European leaders have made sufficient efforts to tackle the crisis themselves.
“As we have repeatedly said, Japan is prepared to support Europeans’ efforts to stabilize financial markets, including through lending to the IMF,” but such an arrangement should follow “strong efforts” by Europe to address the crisis, the official said on condition of anonymity.
The $500 billion addition includes $200 billion recently committed by key European Union countries, the IMF spokesman said. The current lending capability of the IMF is believed to be around $350 billion to $400 billion.
“We are exploring options on funding and will have no further comment until the necessary consultations with the fund’s membership have been completed,” the statement added.
The Washington-based lender is expected to procure necessary funds from the Group of 20 advanced and emerging economies. Among emerging economies, Brazil and Russia have shown willingness to cooperate for providing funds and decisions by
The figure released by the IMF is a mere estimate, the official stressed. Japan, the second-biggest stakeholder in the fund after the United States, “hasn’t made any specific commitment at this moment.”
The official added Tokyo will collaborate with other members of the Group of 20 advanced and emerging economies on the issue.