Nations from around the world firmed up their commitments to provide emergency resources for the International Monetary Fund (IMF) designed to deter the spread of crises and increase the institution’s lending capacity to help countries in financial trouble.
“Countries large and small have rallied to our call for action,” said IMF Managing Director Christine Lagarde. “I salute them and their commitment to multilateralism. As a result, the total pledged has risen to 456 billion, almost doubling our lending capacity.”
Lagarde was attending a meeting of the Group of 20 (G-20) industrialized and emerging market countries in Los Cabos, Mexico.
“With today's announcements, some 37 of the IMF’s member countries, representing about three-fifths of total quota in organization, have joined this collective effort, demonstrating the broad commitment of the membership to ensure the IMF has access to adequate resources to carry out its mandate in the interests of global financial stability,” she said.
In April, the G-20 and the broader membership of the IMF had pledged a total of 430 billion to help reinforce the IMF at a time of global uncertainty, particularly because of the crisis in Europe.
The IMF, which has 188 member countries, stressed that the new resources would be available for crisis prevention and resolution and to meet the potential financing needs of all IMF members. It provided a detailed list of amounts being contributed by different countries.
They will be drawn only if they are needed as a second line of defense after resources already available from the members’ pool of resources, known as quotas and the existing New Arrangement Borrow. If drawn, they will be repaid with interest. “The IMF is committed to assuring our members’ interests and resources are safeguarded,” Lagarde said.
The IMF has warned that global risks are on the rise again and has urged policymakers to act together to achieve lasting stability and growth and boost job creation. In particular, the IMF has called for comprehensive action to revive growth and reduce unemployment in Europe.
Lagarde said after the Los Cabos summit that the G-20 joint Leadeers Declaration was a step in the direction of restoring confidence in the global economy.
“We have more work to do before global recovery is assured, but I take away from Los Cabos a sense of convergence that will facilitate the comprehensive and coordinated approach to global economic and financial challenges advocated by the IMF.”
She added the seeds of a pan-European recovery plan had been planted.