Debt Crisis: IMF to raise $500bn to boost global funds to $1 trillion
Published 18/01/2012 | 14:45
THE International Monetary Fund has confirmed reports that it will raise up to $500bn (€390bn) in a bid to boost global financing needs of $1 trillion against the backdrop of the eurozone debt crisis.
Earlier today the euro gained on speculation of the move.
“Based on staff’s estimate of global potential financing needs of about $1 trillion in the coming years, the fund would aim to raise up to $500bn in additional lending resources,” the IMF said in a statement.
“This total includes the recent European commitment of about $200bn in increased fund resources.
“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 euro traded up to $1.2845 on speculation that the IMF, headed up by Christine Lagarde, will intervene – on Friday it hit lows not seen since last August.
But there are still worries that new talks to resolve the Greek crisis due for today could limit gains.
Greece desperately needs to resolve its issues with creditor banks with €14.5bn in bond redemptions due in March.
All eyes will be on French and Spanish bond sales later this week while analysts said investors are on the lookout for positive news.
Last week Standard & Poor’s downgraded the AAA rating of France and also cut its outlook for a number of other European countries but other agencies did not follow suit.
It also downgraded the rating of the European Financial Stability Facility bailout fund.
Meanwhile, German Chancellor Angela Merkel said she was confident about the EU fiscal pact being drawn up to increase Government budgetary discipline.
"We're still in the thick of the negotiations," Dr Merkel said at a press conference in Berlin although she conceded that elements of it "still need to be worked on."
"I'm not pessimistic that we will make progress."