Japan Pledges $60 Billion To IMF Firewall For Europe
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Japan will provide $60 billion in loans to the IMF in order to boost the fund’s financial firepower against the eurozone debt crisis, announced Japanese Finance Minister Jun Azumi, who also pledged to coordinate an international effort with other finance ministers ahead of a crucial G-20 meeting in Washington later this week.
Japan will provide $60 billion in loans to the IMF in order to boost the fund’s financial firepower against the eurozone debt crisis, announced Japanese Finance Minister Jun Azumi, who also pledged to coordinate an international effort with other finance ministers ahead of a crucial G-20 meeting in Washington later this week.
Speaking to reporters after a regular cabinet meeting on Tuesday, Azumi said that his government was prepared to take the lead in providing funds for the IMF after several countries, including the U.S. and China, had shied away from the fund’s efforts following doubts over Europe’s own commitments.
[quote]”Following a series of eurozone’s policy responses, it is important to strengthen IMF funding and pave the way for ensuring an end to the crisis not only for the eurozone but also for Japan and Asian countries,” told Azumi to a press conference, as cited by Reuters.[/quote]Related: China & Japan To Collaborate On IMF Decisions
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Azumi added that Japan’s contribution, which will be formally announced at the G-20 meeting, would hopefully encourage other countries to follow suit, though he acknowledged that it would be “difficult” for certain countries to commit to a contribution by the end of the week.
“The world is in need of strengthening IMF lending, so Japan has been taking the lead in coordinating opinions with other countries concerned…I am confident that many other countries will pledge contributions to the IMF,” he said.
Once their contribution is formalised, Azumi’s government will become the first non-European nation to commit money towards the IMF’s European firewall. In the process, the Japanese government will also be the single largest contributor for the fund, which has $310 billion in commitments thus far – with eurozone nations committing about $200 billion collectively, while other European Union nations have provided an additional $50 billion.
Some economies, including major emerging market such as China, Brazil and Russia, have said that they were willing to chip in though they would be looking to get more voting power in return. Others, such as Canada and the U.S., have insisted that they would not be contributing to the fund at all, believing that Europe had enough resources to deal with their own crisis.
Related: Why the Eurozone Must Stop Blackmailing the IMF: Simon Tilford
Though Azumi admitted that Japan’s long-standing position was that Europe could, and should, be doing more to combat the crisis, he nevertheless felt that the rest of the world was responsible for ensuring that the crisis did not spread any further.
[quote]”I don’t think Europe has made enough efforts on their own,” said Azumi. “I must urge them to beef up their firewall further.”[/quote]But “we can never be optimistic about the situation in Europe, even though the area is almost set to exit the crisis thanks to (government) policy efforts,” Azumi was quoted as saying by AFP.
IMF’s Managing Director Christine Lagarde thanked the Japanese government for their pledge, and said that she would scale down her request for $600 billion in additional resources to between $400-$500 billion as threats to the global economy diminished.
Related: IMF’s Lagarde: Global Economy May Be On Path To Recovery
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“Some of the dramas that were envisaged” at the end of 2011 or early this year have not materialized and some “good news” has restored a little bit of confidence, Lagarde said last week, as cited by Bloomberg.
“I am grateful for Japan’s leadership and strong commitment to multilateralism, and I call on the broader fund membership to follow Japan’s lead,” added Lagarde, immediately after Japan’s pledge.
