IMF seeks to bolster war chest

THE International Monetary Fund is seeking to boost its war chest by $600 billion (€473.35bn) to help countries reeling from the eurozone debt crisis, but some nations insist that Europe must first do more to support its ailing members, international financial sources said yesterday.

Group of 20 officials will discuss increasing IMF resources at a meeting in Mexico City today and tomorrow, the first under Mexico’s 2012 presidency of the group of developed and emerging economies.

The IMF said in a statement it will need $500bn to lend to member countries in need, and IMF sources who were present at an IMF board meeting on the issue on Tuesday told Reuters that another $100bn is needed as a “protection buffer”.

The IMF also estimated there would be a $1 trillion global financing gap over the next two years, if global economic conditions worsened considerably, the sources added.

On foreign exchange markets, the reports of plans for increased IMF lending capacity helped boost the euro.

Eurozone nations have already promised to inject an extra €150bn into the IMF, which is included in the total estimate, but G20 officials in Mexico for the meeting of deputy finance ministers and central bank officials said there was still resistance in some quarters to increase funding.

“Many countries want the Europeans to move ahead with tougher and clearer measures, which at this moment translates to more resources to its stability fund,” said a senior Brazilian government source attending the meeting.

Another source connected to the process said the US, Canada, Japan and Korea were pressing for discussions first about Europe’s contribution to the crisis.

The IMF currently has a lending capacity of about $380bn.