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IMF could be set for $600bn funding hike

Wednesday 18 January 2012 - by

The International Monetary Fund is to ask its members for $600bn (€468bn) in further funding to help insulate the global economy against the eurozone debt crisis, according to reports.

Having identified around a $1tn (€0.78tn) global financing gap over the next two years the international lender wants to lift its available lending funds up to $885bn (€690.3bn) from the current $385bn (€300.3bn), Bloomberg reports, quoting a person familiar with the talks.

The news comes with managing director Christine Lagarde confirming that the IMF executive board had discussed on Tuesday whether increases to its funding could be needed to help secure international stability.

In a statement released after the meeting Lagarde said: "I welcome the recognition of the importance of ensuring adequate fund firepower to help defuse the current global economic weaknesses and regional challenges.

"To this end, fund management and staff will explore options for increasing the fund's firepower, subject to adequate safeguards. I welcome executive directors' collective interest in resolving the crisis and securing global economic stability."

The IMF's discussion was prompted by the G20, which said in November 2011 that it "stands ready" to provide additional resources to the fund. National finance ministers have been asked to work on various ways of upping their respective contributions in hope of an agreement at the next meeting of G20 finance ministers and central bankers, to be held in Mexico in February.

Emerging markets including Brazil and China have publicly pushed to increase their stakes in the international lender, saying that using the funds could help stem the eurozone crisis which, if allowed to continue, would impact on their rapid economic growth.

Increased funding from these countries could also affect their clout at the IMF, where countrywide voting rights and contributions are still largely based on the standings of national finances from the Bretton Woods era.

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