Jumat, 13 April 2012

G-20 will " pledge " to increase resources to IMF - 100 billion possible from China and Japan but nothing from the US and Canada ! IMF looks likely to settle for less " pledged " support than originally sought and even then an agreement probably won't be reached at the G-20 - emerging nations want Germany to do more which is one reason nothing concrete probably will come forth next week.


BRUSSELS (Reuters) - The world's 20 biggest economies are likely to agree to increase the resources of the International Monetary Fund by between $400 and $500 billion, rather than the $600 billion initially sought by the IMF, Group of 20 officials have told Reuters.
The extra money is to give the IMF, which is a lender of last resort to governments, more firepower to fight the sovereign debt crisis, triggered by unsustainable policies in euro zone countries such as Greece, Portugal and Ireland.
G20 finance ministers meet next week in Washington to discuss the IMF's call for more resources from January after the euro zone increased the size of its own crisis-fighting funds in March in response to G20 pressure.

IMF Managing Director Christine Lagarde said on Thursday that reaching an agreement could take some time, a sign that next week's meeting may not be the last word.
But she also said the IMF may not need as much money as it thought just a few months ago as economic and financial risks had receded and the global lender's funding needs were now smaller.
Officials said that with the first quarter peak of euro zone government refinancing needs already taken care of by the European Central Bank's cheap long-term loans, or refinancing operations, the need for more IMF resources has diminished.
"I would say it will be somewhere between $400 and $500 billion and it very much depends on how much the big global economies and European, but non-euro zone economies pledge," one G20 official said.
In January, the IMF estimated it would need an additional $500 billion to lend and another $100 billion for reserves to erect an adequate safeguard against the risks posed by the euro zone's crisis.
"It has always been clear that the $500 to $600 billion ... was too much, not realistic," a second G20 official said.
"We would be happy if we get as much from other countries as the Europeans are willing to provide," the second official said.
Euro zone countries have committed to provide 150 billion euros ($200 billion), while other European Union countries have pledged another $50 billion.
The first official said China and Japan might provide another $100 billion or slightly more between the two of them.
"Japan and China appear to be relatively happy with what Europe has achieved," a third G20 official said.

"But for developing economies, there's still a strong sense that rich members like Germany should play a bigger role in fixing the region's problems. There might not be a deal until the last minute," the third official said.
Officials said there would be intense telephone diplomacy under IMF coordination between capitals next week to discuss who will pledge how much and when.
The only countries not expected to contribute to the increase in IMF resources now were United States and Canada.
"All the others are candidates to pledge to an increase in the NAB (New Arrangements to Borrow) resources," the first official said.
The discussion of more cash for IMF bailouts of governments comes at a time when fresh concerns about the sustainability of Spanish public finances have boosted Madrid's borrowing costs on the market close to six percent.
"In the framework of discussions about the euro zone crisis, Spain represents a downside risk," the first official said.
"There will be a mention of it, without going into details. I don't expect there will be specific sniping at Spain, the focus will be clearly on policy responses and IMF resources."

and from the Telegraph liveblog , some additional thoughts on the IMF's quest to convince strapped nations to bail out the Eurozone.....

13.17 Mr Lewis also explains why the IMF might try to persuade "considerably poorer" economies to help to prop up the eurozone:
QuoteThe breakdown of that system might well impose costs not only on Europe but on the rest of the world also. That seems to be how euro zone leaders see matters. It lies at the root of their otherwise surprising assumption that G20 countries outside the euro zone, even some which are considerably poorer in terms of GDP per capita, should make a contribution to a firewall to stop contagion within the single currency area from tearing the euro apart.
13.11 G20 ministers will meet next Friday, ahead of the IMF and World Bank's Spring Meetings on April 20 - 22. However, Christine Lagardesaid a decision on the size of the IMF's firewall is likely to take some time.
Stephen Lewis at Monument Securities comments on other challenges facing the IMF:
QuoteMme Lagarde earlier this week reiterated her call for the USA and Japan to fashion credible plans for reducing government debt over the medium term. [She] has been taking a different line with hard-pressed sovereign debtors in the euro zone. Though economic demand in these countries has typically been weaker than in the USA or Japan, the IMF has backed EU authorities in insisting on immediate action to effect swingeing cuts in government deficits.
Mme Lagarde is far from willing her prescription as a universal rule, however, probably because she is well aware that if all countries with large government deficits and rising public debt were to act as the peripheral euro zone nations have been coerced into doing, the global economy, or at least the advanced sector of it, would be locked in a prolonged downturn. Clearly, then, the IMF’s priority in enforcing fiscal restraint on euro zone member-states is the preservation of the euro arrangements. Though we may suspect that political motivations lurk behind the position the IMF has adopted, that need not be the case. It could be that the IMF genuinely sees significant benefits for the world economy from keeping the present euro currency system alive in Europe.
12.55 The world's 20 most powerful economies are prepared to boost theIMF's firepower by between $400bn (£251bn) and $500bn to help fight the eurozone's debt crisis.
China and Japan might together provide another $100bn, one G20 official told Reuters. Another said:
QuoteJapan and China appear to be relatively happy with what Europe has achieved.
The $500bn quoted is less than the $600bn initially sought by the IMF in January. A third official told the newswire:
QuoteIt has always been clear that the $500 to $600 billion [...] was too much, not realistic [...] We would be happy if we get as much from other countries as the Europeans are willing to provide.
Eurozone countries have already pledged another €150bn to the IMF, while other EU countries have pledged $50bn.
George Osborne has said that the UK would not pledge additional funds to the IMF unless Europe showed that it was doing enough to "stand behind" its currency.

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