Friday 22 September 2017

Lagarde says IMF's capital is sufficient amid rumour of 'injection'

THE International Monetary Fund has enough capital at the moment, managing director Christine Lagarde said yesterday. She told Europe 1 Radio: "Today, the IMF has appropriate means."

An emerging market G20 source said on Friday that the IMF might need a capital injection of about $350bn (€254bn) to give it more firepower to fight economic crises.

The senior delegation source said that any recapitalisation would not be part of a plan the eurozone aimed to present later this month to stem its deepening debt crisis.

A second source at the G20 finance chiefs' talks in Paris cautioned that there was little chance of an agreement on any capital increase at their two-day meeting.

Yesterday, Ms Lagarde also said that the state should only be involved in bank recapitalisations as a last resort.

Shareholders

"The priority is that they get capital from shareholders and, as a last resort, if these means were not available or sufficient, a more collective formula (should) be put in place including with the state intervening if necessary," she said.

The IMF will release funds to Greece if the country's economic situation is clarified, Ms Lagarde said.

She also said that the IMF had the resources to meet its needs.

The IMF is weighing whether it could expand its rescue lending capacity through debt issuance or bilateral borrowing as part of a review of its crisis-fighting resources mandated by the IMF chief.

Should a country the size of Italy or Spain need rescuing, the IMF's funds could be severely strained.

But the IMF's dominant shareholders, including the United States, Japan, Germany and China, would likely be wary of a new independent funding source that could dilute their influence. (Reuters)

Irish Independent

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