SOME OF THE WORLD’S largest economies have agreed to invest more than €325 billion in new funding for the International Monetary Fund, in a bid to increase its lending capacity and help it to fight the global debt crisis.
The Eurozone will be the largest contributor, sending €150 billion of funds to Washington in order to bolster the IMF’s resources, as fears resurge about the possibility of large economies like Spain being priced out of bond markets.
China, Russia, Brazil and India will be among the countries contributing to the current funding batch, though the exact quantities of their contributions have yet to be determined.
In a joint statement the IMF and the G20 said they remained “committed to take the necessary actions to secure global financial stability”.
“We have reached agreement to enhance IMF resources for crisis prevention and resolution. This is the result of a broad international cooperative effort that includes a significant number of countries,” they said.
The extra funding will be provided through temporary bilateral loans to the IMF’s main account. The money is being handed over on the condition that if it is ever needed to bail a country out, the “adequate burden sharing among official creditors would apply, as approved by the IMF Board”.
IMF managing director Christine Lagarde said the pledge of extra funding “signals the strong resolve of the international community to secure global financial stability and put the world economic recovery on a sounder footing”.
“This broad-based response to our request for additional resources will help strengthen global economic and financial stability in the interests of all our members.”