Business

IMF seeking $500bn funding boost

Christine Lagarde
Image caption IMF head Christine Lagarde welcomed the "commitment of European members"

The International Monetary Fund (IMF) has said it will seek to increase its resources by $500bn (£325bn) to help stabilise the global economy.

The extra money could be used to help countries in the eurozone struggling to pay their debts.

But the IMF said it may need up to $1tn "in the coming years".

The $500bn includes the recent European commitment to commit 150bn euros (£125bn; $194bn) to the IMF, the 187-nation body said.

"Based on staff's estimate of global potential financing needs of about $1tn in the coming years, the Fund would aim to raise up to $500bn in additional lending resources," the IMF said.

"At this preliminary stage, we are exploring options on funding and will have no further comment until the necessary consultations with the Fund's membership have been completed."

The IMF currently has a a total borrowing capacity of about $590bn, and the Fund's lending commitments are at a record $250bn.

With Europe pledging the bulk of the extra funding, the IMF will have to discuss with its other members how to get the remaining resources.

European funding

At a summit in December, most of the European Union vowed to add about 200bn euros to the IMF's resources - which in turn could be lent to stricken nations such as Greece or to the eurozone bailout fund.

But the UK decided not to take part in the scheme to support the eurozone, so the EU failed to reach their target.

Last year, UK MPs voted to increase the UK's annual subscription to the IMF from £10.7bn to £20.1bn as part of an overall increase in the IMF's funding base agreed in principle in 2009.

UK Prime Minister David Cameron has said it is "in our interests" to support the IMF but has stressed that additional money would not support a eurozone bailout.

And the Chancellor of the Exchequer, George Osborne, has said: "The UK has always been willing to consider further resources for the IMF, but for its global role and as part of a global agreement,"

On Tuesday, IMF head Christine Lagarde said that she welcomed the "commitment of European members to contribute to the Fund's resources".

"To this end, Fund management and staff will explore options for increasing the Fund's firepower, subject to adequate safeguards," she said in a statement.

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