IMF seeks up to USD 500 billion in new funds

Brussels: The International Monetary Fund (IMF)said today that it’s aiming to increase its financialfirepower by around USD 500 billion so it can give out newloans to help mitigate a worsening financial crisis.

Responding to widespread speculation surrounding itsfunding requirements, the Washington-based institution saidits staff estimates that countries around the world will need about USD 1 trillion in loans over the coming years.

Most of the concerns centre on the 17-nation eurozone,which has been embroiled in a debt crisis for around twoyears.

[caption id=“attachment_186983” align=“alignleft” width=“380” caption=“Thanks to some USD 200 billion that European countrieshave recently promised to the IMF, it is already more than one-third on its way to reaching its fund-raising goal.Reuters”]  [/caption]

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“At this preliminary stage, we are exploring options onfunding and will have no further comment until the necessaryconsultations with the Fund’s membership have been completed,“a Fund spokesman said in a statement.

Thanks to some USD 200 billion that European countrieshave recently promised to the IMF, it is already more than one-third on its way to reaching its fund-raising goal.

The IMF has put up about a third of the financing of theeurozone’s bailouts over the past two years, but there aregrowing worries that non-European countries will also needmore help given the worsening economic outlook.

Earlier, its sister organization, the World Bank, urgedemerging countries that they have to be ready for a severeglobal downturn if the crisis in the 17-nation eurozoneintensifies.

The eurozone, in particular, has been pushing countriesaround the globe to give more funds to the IMF in the hopethat it would build up a larger firewall to stop thecontinent’s debt troubles from spreading to large economies

like Spain, Italy or even France.

But so far, even countries relatively flush with cash asChina or Brazil have been reluctant to put up more money forEurope. The United States is also reluctant to increase thefund’s resources.

British Prime Minister David Cameron said Wednesday thatthe government would be prepared to back an increase but thathe would require approval rom his Parliament.

“We believe the IMF must always lend to countries, not tocurrencies,” Cameron said at a news conference with ItalianPremier Mario Monti. “We would only act if that was withothers, not just as part of a eurozone measure.

However, Cameron said it’s up to the eurozone itself toprove that it’s “standing behind its own currency.”

How the IMF’s fund-raising goal will be reached is set tobe discussed at a meeting of finance ministers of the Group of20 leading economies in Mexico next month.

AP