Japan may lend around $60 billion to the International Monetary Fund as an emergency step to bolster a global financial firewall set up to prevent the sovereign debt crisis in Europe from spreading, a government official said Sunday.
Tokyo is in talks with key members of the IMF, such as China and European nations, to finalize contributions to the multilateral lender before the Group of 20 finance chiefs’ meeting later this week in Washington.
Japan’s contribution could be one of the biggest by an IMF member, the official said. China is expected to take the lead among emerging economies by offering a similar amount, but some of them are still calling on Europe’s leaders to do more to help themselves.
Japan, the IMF’s second-biggest stakeholder after the United States, has signaled it is ready to lead the IMF and G-20 in key discussions on the issue since the U.S. government is reluctant to get more aggressively involved with any fresh boost in IMF resources.
Tokyo welcomed a recent decision by eurozone finance ministers to temporarily increase their bailout funds to €700 billion from €500 billion to prevent the fiscal problems of Greece, Ireland and Portugal from spreading to bigger members like Spain and Italy.
Although there remain calls for the single currency bloc to do more to address the crisis, the G-20 is likely to hail the boost when its finance ministers and central bank governors convene Thursday and Friday in Washington on the sidelines of the spring meetings of the IMF and World Bank.
The IMF, based in Washington, said it would need an additional $500 billion in lending power and called for its members to chip in to help meet global financing needs for the coming years.
But on Thursday, IMF Managing Director Christine Lagarde said in a speech that the needs may not be as large as the international fund estimated in January, pointing to declines both in the tensions in Europe and in the chances of the crisis actually pulling down global growth.
The G-20 groups Argentina, Australia, Brazil, Britain, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey, the United States and the European Union.
From Japan, Finance Minister Jun Azumi and Bank of Japan Gov. Masaaki Shirakawa are expected to join the meeting in Washington.