Brussels, 23/04/2012 (Agence Europe) - The International Monetary Fund has increased its financial sources to $430bn thanks to firm commitments from Europe last week at the Spring summits of the IMF and the World Bank. The BRICS have yet to announce how much cash they will be providing for the IMF, but are expected to make this clear ahead of the June 2012 G20 summit in Mexico. The new cash will help IMF member countries although most people believe that the main beneficiaries will be the eurozone nations, because of the sovereign debt crisis in Europe.
More than half of all the new IMF cash has been pledged by Europe. The eurozone offered to provide an additional €150bn a few months ago. Other EU countries, Denmark, Poland, the Czech Republic and Sweden, along with Norway and Switzerland, will each be providing a further $2bn to $15bn. Saudi Arabia and South Korea will each give $15bn, and Japan $60bn. The BRICS (Brazil, Russia, India, China and South Africa) have not yet put a figure on the extra cash they will be providing, but they have agreed to contribute. Some countries, Brazil for example, are making their contribution conditional upon reform of the quota system at the IMF. The United States is refusing to say how much money it will be providing until after the upcoming presidential elections, while Canada says Europe should sort its problems out itself.
In a press release, German Finance Minister Wolfgang Schäuble commented that the new contributions meant that the IMF would be sufficiently prepared to meet the world's challenges. He said Europe had done its job and led the way in terms of promising extra cash for the IMF. Schauble said he was delighted that Europe's partners were taking on board their responsibilities for the global economy.
European backstop. In a press release, the IMF welcomed the important action taken by the eurozone to deal with the sovereign debt crisis and the eurozone's decision in March “to strengthen the European firewall” to €700bn by combining the €200bn already committed by the European Financial Stability Facility (EFSF) with the €500bn in the new European Stability Mechanism (ESM). The IMF says it is crucial for the eurozone to deal with its debt in order to boost confidence and rebalance the eurozone, guaranteeing financial stability and pursuing structural reforms. (MB/transl.fl)