Discussions to beef up IMF ongoing: Azumi

Kyodo

Japan has been consulting with other nations about bolstering the resources of the International Monetary Fund to prevent the sovereign debt crisis in Europe from dragging down global economic growth, Finance Minister Jun Azumi said Monday.

Azumi told reporters Tokyo has yet to finalize the amount of its contribution to the Washington-based multilateral lender, but some Japanese media reports say it is considering offering $60 billion in emergency loans to the organization.

“We are adjusting opinions ahead of the G-20,” Azumi said, referring to the meeting of the Group of 20 finance ministers and central bank governors on Thursday and Friday in Washington.

According to government officials, Azumi held talks last week with IMF Managing Director Christine Lagarde over the phone, during which Lagarde apparently asked for assistance from Japan, the second-biggest stakeholder in the IMF after the United States.

In January, the IMF estimated it would need an additional $500 billion in lending power to meet global financing needs for the coming years. But on Thursday, Lagarde said in a speech that the needs may not be as large as the fund had estimated, underscoring eased tensions in Europe.

Japan had urged the IMF to lower the de facto target, a senior Japanese official said earlier, and the IMF is believed to have lowered the potential financing needs to around $400 billion.

Also Monday, another senior official said the Japanese government welcomes the decision by China to widen the trading band for the yuan for the first time in five years.

“We believe this is a positive development” toward more flexibility in the Chinese currency, the official said. “This would help China have more focus on domestic demand in stimulating its economy.”

The People’s Bank of China, the nation’s central bank, said Saturday that it would raise the daily trade limit of the yuan against the dollar from 0.5 percent to 1.0 percent a day, starting Monday.

The move is widely seen as aimed at dodging criticism that Beijing has kept the yuan artificially cheap, giving Chinese exporters an unfair trade advantage and resulting in a huge global trade imbalance.