IMF’s Managing Director: Every little helps
Christine Lagarde is calling on the world’s economies to follow the Japanese example in boosting the International Monetary Fund’s financial strength. Japan has become the first non-European country to lavishly give the fund a helping hand with $60 bln in
The money is expected to boost the fund’s financial strength to endure the euro zone debt crisis. The contribution will be officially announced at a G20 financial leaders' meeting later this week. Japanese Finance Minister Jun Azumi said he hoped his move will encourage other countries to follow suit. Meanwhile Japan’s PM says the IMF, which is a lender of last resort, needs to increase its finances to cushion not only the euro zone crisis setbacks but also back up Japan and other Asian countries.But the non-European world is not rushing to lend IMF its support. So far the so-called BRICS have been keeping out. Russia, China and Brazil have said they were ready to club together but were looking to get more voting power in return. Though, according to the Japanese Finance Minister China, which is the world’s largest holder of foreign-exchange reserves, shares Japan’s position towards the IMF, and Azumi hopes Japan’s pledge will accelerate the commitments of others.So far the US, which is trying to give a kick to its ailing economy ahead of the presidential election, adamantly said it will not get involved in these efforts. Canada also refused to bail out Europe, saying it’s strong enough to stand up to the side effects of the euro zone debt problems using its own resources if necessary.The IMF wants to boost its funding by $600bln as there’s increased concern about the euro zone debt crisis, highlighted by soaring Spanish borrowing costs. So far the euro nations have committed to pitch in €150 billion.Azumi underlined that Europe needs to do more itself to strengthen financial firewalls, and Lagarde seems to realize the urgent need of that as well, though in her own way, saying last week that she would scale down her request for $600 billion of additional resources as threats to the global economy diminished.