George Osborne, Britain’s Chancellor of the Exchequer, said Britain will pledge $15 billion to expand the resources of the International Monetary Fund and that he will be able to commit the money without parliamentary approval.
The increase is likely to meet opposition from lawmakers in his Conservative Party who oppose increasing the Washington- based lender’s firepower, particularly if the money is used to bail out other European countries.
“The world needs a strong IMF and we can be one of the many countries that will support the IMF,” Osborne told reporters in Washington. “It’s part of a global effort.”
Osborne has already committed about £29 billion ($47 billion) from within the £39 billion-ceiling approved by the House of Commons, leaving him about £10 billion headroom to lend more. The U.K.’s extra contribution is “broadly in line” with funds pledged by other non-euro area countries and in line with its quota share to the IMF, Osborne said.
The extra funds, if disbursed, will be subject to full IMF lending conditions, Osborne said, though those conditions haven’t been set. The loans would be made to countries, not currency blocs, and come after a European Union pledge to expand its own firewall by 800 billion euros. Osborne said the IMF will get about $400 billion extra money.
Conservative Party lawmakers say they will oppose boosting the IMF’s resources if they are to be used to bail out Spain or other southern European countries that use the euro. Mark Pritchard, the secretary of the 1922 Committee of Conservative lawmakers without a government portfolio, said in November that Prime Minister David Cameron would lose the “goodwill of the public” if more money is committed to the IMF.
Osborne said today the pledge is a “contingent liability” that is drawn from the U.K.’s currency reserves and does not “add to the deficit,” Bloomberg reported.