The European Union expects leaders of the world’s 20 biggest economies (G20) to agree to contribute more money to the IMF in April after Europe expanded its own bailout capacity, EU officials said on Saturday.
The International Monetary Fund is seeking to more than double its war chest by raising $600 billion in new resources to help nations deal with the fallout of the euro zone debt crisis
But most G20 countries have said that before they inject any new money into the IMF, the euro zone must first put up more of its own money to resolve its sovereign debt crisis.
In response, finance ministers from the 17 countries sharing the euro, called the Eurogroup, on Friday raised the combined lending capacity of their two bailout funds to 700 billion euros from 500 billion.
The increase was a compromise between tempering new demands on euro zone taxpayers and assuring markets that money invested in euro zone debt was safe. “It is important to ensure that the IMF has enough resources to play its systemic role in the world economy and yesterday’s agreement within the Eurogroup…is very important in this respect,” said Danish Economics Minister Margrethe Vestager, whose country holds the rotating EU presidency, Reuters reported.
G20 finance ministers and central bank governors will discuss an increase in IMF resources on April 22 in Washington. “This is the time for increasing IMF resources. It is in the interest of all countries, the focus is very much on Europe, but it is very important to recognize that there are vulnerabilities in other parts of the globe as well,” Vestager said. “I think and I hope, and that is what we are working for, that we will reach an agreement in April,” she added.
But five large emerging economies – Brazil, Russia, India, China and South Africa (BRICS) – have said they will only support an increase in IMF resources if they are given more say in the IMF, as envisaged by a 2010 reform.
“The EU is aware of its responsibility in successfully implementing the 2010 IMF quota and governance reforms and is working on implementing it in full,” an EU terms of reference document prepared for EU delegations for the Washington meeting said.