IMF wants to boost Finances

Chancellor George Osborne is under pressure from the International Monetary Fund (IMF) to provide more loans to help economies in trouble.

Finance ministers from the G20 group of leading economies are meeting in Washington to discuss boosting the IMF’s resources.

IMF managing director Christine Lagarde wants to boost her organization’s lending capacity by $400bn (£250bn).

Mr Osborne can commit an extra £10bn without approval from Parliament.

The IMF has already received commitments of $320bn, including $60bn from Japan.

Brazil wants to have a bigger say in running the IMF in return for a commitment of extra money, while the US is not likely to offer any money because doing so would attract criticism at home in a presidential election year, according to BBC economics correspondent Andrew Walker.

Committing the extra money does not mean it will actually need to be loaned.

The IMF hopes that if private investors think that countries in trouble can be rescued if necessary, they will be more willing to lend to them and any funding problems will not escalate.

It has already warned that the eurozone’s debt crisis poses the biggest threat to the global economy, and warnings about Europe are expected to top the eventual communique from the meetings.

Mr Osborne has some room for manoeuvre because Parliament has previously approved £40bn of loans, of which only £30bn has been committed.

But he is expected to insist that funds should not be specifically earmarked for the eurozone, and that bailouts will be for countries and not currencies.

Comments
Loading...