British Chancellor of the Exchequer George Osborne says his country will loan the International Monetary Fund $15 billion as part of a drive expected to add more than $400 billion to the global lender’s resources.
Osborne cast the move as a sign of Britain’s fiscal strength. He told reporters Friday that Britain was able to contribute because the austerity measures carried out in recent years by Prime Minister David Cameron’s government had strengthened its economic position. Osborne is in Washington to take part in meetings of the Group of 20 leading economies and the IMF.
He said: “Britain is not turning up in Washington seeking a loan from the IMF. Britain is turning up offering a contribution.” The British contribution is relatively small. For instance, Japan has offered $60 billion.
Meanwhile, China and other emerging economies were set to test their new-found political clout Friday, as the world’s leading economies turned to them for the final pieces of a $400 billion IMF crisis fund.
Underscoring the tectonic shift of power from developed to developing nations, the likes of Brazil, Russia, India and China are being asked to stump up cash to help the International Monetary Fund ease debt crises, particularly in Europe. With economic weakness in Italy and Spain sparking fears that the eurozone crisis will again get worse, the IMF was still tens of billions of dollars short raising the $400 billion it says is needed to fight the crisis as its annual Spring meetings began.
Europe has pledged $200 billion, Japan $60 billion, and Nordic countries, Switzerland, Poland and others have offered another $60 billion. The debt-ridden United States, the IMF’s largest shareholder, has refused
to contribute to the crisis fund, which leaves the BRICS — Brazil, Russia, India, China, and South Africa — the best source for cash.
But that also put the rising nations in a position to ask for more say in the G20 and the IMF, which have long been dominated by the United States, Europe and Japan.
Russia became the first of the rising economic powers to commit cash, withDeputy Finance Minister Sergei Stortchak as saying that Moscow was prepared to offer $10 billion.
But after huge bailouts of Greece, Portugal and Ireland, the BRICS have become increasingly critical of the IMF’s exposure to the eurozone.
China’s foreign ministry indicated Thursday it was still thinking about its contribution.
“We are willing to discuss various funding plans for the IMF with IMF members, in a frank and positive manner,” China’s Foreign Ministry spokesman Liu Weimin said, according to Xinhua. India’s finance minister Pranab Mukherjee, speaking for the Group of 24 middle income countries, said reforms of IMF voting rights agreed in 2010 must be completed and built upon.
“We believe that the ultimate goal must be to better reflect the growing role of (emerging economies) as a whole in the global economy,” the G24 said in a statement after meetings with IMF boss Christine Lagarde. But as the IMF and G-20 meetings got under way there were some signs of strain.
German Finance Minister Wolfgang Schaeuble called on members of the elite Group of 20 economies to stop talking and show their hands. “The debate over (IMF) resources must come to an end,” he told journalists ahead of a meeting of G20 top finance officials in Washington.
“The crisis of confidence on the financial markets regarding the Eurozone has not fully been overcome. But the substantial decisions have been made and we are on a good way.”
Having already rolled back the goal for new crisis intervention funds from $500 billion, the IMF appeared to need another $70 billion for its “global firewall” going into Friday’s G20 finance minister and central bank chief meetings in Washington.