Global talks to increase the International Monetary Fund’s lending resources should yield a figure similar to Europe’s $1 trillion effort to combat the debt crisis in the euro region, a German government official said.
Many of Germany’s international partners are aware that discussions at the IMF’s meeting in Washington this week must demonstrate that Europe doesn’t stand alone in combating its debt woes so there must be a parallel process to Europe’s efforts, the official told reporters in Berlin today on condition of anonymity because the negotiations are private.
Germany has the clear expectation that countries around the globe help provide funds that, together with Europe’s efforts, convince financial markets its size is sufficient, the official said. European Union governments agreed to add 500 billion euros ($656 billion) in fresh money to 300 billion euros already committed to create a backstop that equals about $1 trillion.
IMF Managing Director Christine Lagarde said April 12 that she will scale back her request for $600 billion of additional resources, adding she hopes to make “real progress” on getting additional funding when the IMF’s 187 member nations meet in Washington this week.
Japan pledged $60 billion to boost the IMF’s resources today, with Finance Minister Jun Azumi saying that he hoped for an early agreement on contributions among Group of 20 members, who will also gather in Washington. Euro nations have pledged to pitch in 150 billion euros, and Sweden offered as much as $15 billion, depending on other nations’ contributions. The U.S., the fund’s largest shareholder, has refused to join in.
Germany doesn’t share the view held by some other countries that economic growth should be bolstered by additional government spending, the official said. Germany will remind its G-20 partners to meet their Toronto summit commitments of halving budget deficits and stabilizing debts, he said.
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