WASHINGTON/MEXICO CITY: The IMF is seeking to more than double its war chest by raising $600 billion in new resources to help countries deal with the fallout of the euro zone debt crisis, but the plan faces roadblocks from the United States and other countries.
The United States and Canada said on Wednesday that Europe must put up more of its own money to resolve its sovereign debt crisis, raising doubts G20 talks in Mexico this week can lay the ground for a deal on bolstering IMF resources.
Japan and South Korea also want Europe to do more and China might insist a number of conditions are met before it supports a boost in IMF resources.
"We continue to believe that the IMF can play an important role in Europe, but only as a supplement to Europe's own efforts," a US Treasury spokesperson said. "The IMF cannot substitute for a robust euro area firewall."
Group of 20 deputy officials meet in Mexico City on Thursday and Friday to discuss boosting IMF resources. Any outcome would need leaders' signoff. G20 finance ministers meet in late February.
The IMF plan to boost its lending capacity eased worries on financial markets about Europe's funding difficulties, boosting the value of the euro.
IMF sources said the world faces a $1 trillion financing gap over the next two years if global economic conditions worsened considerably. The IMF's current lending capacity is about $380 billion.
The sources, present at an IMF board meeting on the issue on Tuesday, said the Fund was seeking to raise up to $600 billion to meet those potential financing needs. Of that, $500 billion would be for lending and $100 billion would be a "protection buffer."
An IMF spokesman confirmed the Fund was seeking to raise up to $500 billion in additional lending resources. He said that amount included a European commitment to inject $200 billion into IMF resources.
"At this preliminary stage, we are exploring options on funding and will have no further comment until the necessary consultations," he said.
indiatimes.com
The United States and Canada said on Wednesday that Europe must put up more of its own money to resolve its sovereign debt crisis, raising doubts G20 talks in Mexico this week can lay the ground for a deal on bolstering IMF resources.
Japan and South Korea also want Europe to do more and China might insist a number of conditions are met before it supports a boost in IMF resources.
"We continue to believe that the IMF can play an important role in Europe, but only as a supplement to Europe's own efforts," a US Treasury spokesperson said. "The IMF cannot substitute for a robust euro area firewall."
Group of 20 deputy officials meet in Mexico City on Thursday and Friday to discuss boosting IMF resources. Any outcome would need leaders' signoff. G20 finance ministers meet in late February.
The IMF plan to boost its lending capacity eased worries on financial markets about Europe's funding difficulties, boosting the value of the euro.
IMF sources said the world faces a $1 trillion financing gap over the next two years if global economic conditions worsened considerably. The IMF's current lending capacity is about $380 billion.
The sources, present at an IMF board meeting on the issue on Tuesday, said the Fund was seeking to raise up to $600 billion to meet those potential financing needs. Of that, $500 billion would be for lending and $100 billion would be a "protection buffer."
An IMF spokesman confirmed the Fund was seeking to raise up to $500 billion in additional lending resources. He said that amount included a European commitment to inject $200 billion into IMF resources.
"At this preliminary stage, we are exploring options on funding and will have no further comment until the necessary consultations," he said.
indiatimes.com
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