IMF to explore options for beefing up firepower
Updated: 2012-01-18 09:11
WASHINGTON - The International Monetary Fund (IMF) would explore ways to strengthen its firepower to combat global economic risks, Christine Lagarde, managing director of the IMF, said on Tuesday.
"I welcome the recognition of the importance of ensuring adequate Fund firepower to help defuse the current global economic weaknesses and regional challenges," Lagarde said in a statement issued after an IMF Executive Board discussion on the adequacy of Fund resources.
"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," noted the statement.
"Today's discussion on the adequacy of Fund resources was a welcome opportunity to assess whether they are sufficient for the IMF to fulfill its mandate and to play a full and constructive role in securing global stability. Following the request of our membership last year through the International Monetary and Financial Committee and the general support by the G20 leaders at the Cannes summit, today's discussion was an important step," said the IMF chief.
"The biggest challenge is to respond to the crisis in an adequate manner and many Executive Directors stressed the necessity and urgency of collective efforts to contain the debt crisis in the Euro Area and protect economies around the world from spillovers," Lagarde noted.
The IMF welcomed the recently announced commitment of European members to contribute to the Fund's resources, while stressing the importance of European firewalls and other policies being sufficiently strong to respond to the crisis in the Euro Area, according to the statement.
Euro Area countries last month agreed to channel 150 billion euros (about $195 billion) to the Washington-based global lender to boost its firewall against the debt crisis, according to a plan agreed during the December 9 European Union (EU) Summit to increase IMF resources by up to 200 billion euros, with 150 billion euros coming from Euro Area central banks.
Britain has refused to join hands at this stage and indicated it would define its contribution this year in the framework of the G20.
Experts held that the IMF needed to bolster its firewall and carefully manage its exposure to the Euro Area debt turmoil, as the current three biggest IMF borrowers, namely Greece, Portugal and Ireland, were all Euro Area nations.