IMF to Press G-20 to Boost Lending Resources to $1 Trillion, Official Says
July 19, 2010 11:23
The International Monetary Fund is seeking a boost in its lending resources to $1 trillion, from the current $750 billion, at a Group of 20 summit in South Korea in November, according to a Korean government official.
The increase would help strengthen a global financial safety net to counter crises, the official said on condition of anonymity because the talks are private. South Korea is chair of the G-20 this year. IMF Managing Director Dominique Strauss-Kahn told the Financial Times that a boost to $1 trillion in IMF lending firepower was a “correct forecast.” Strauss-Kahn has sought to enhance the IMF’s role in serving as a buttress against financial crises, already overseeing a trebling in the fund’s war-chest to $750 billion since early 2009. While the IMF doesn’t foresee the global economy sinking back into a recession, the European debt crisis and elevated U.S. unemployment threaten to curtail the recovery.
“They will have to increase the lending capacity over time to contain a crisis more effectively,” said Ham Joon-Ho, a professor of international economics and finance at Yonsei University in Seoul. Ham added that the IMF will also need to work to encourage members to line up contingency financing with the fund, which most have steered clear of given concern such a step would carry the “stigma” of signaling financial trouble.
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