Japan offers to help fund IMF-led rescues

By Hideyuki Sano and Linda Sieg

WASHINGTON/TOKYO (Reuters) - Japan stands ready to help the International Monetary Fund ride to the rescue of countries struck down by the global credit crisis, Finance Minister Shoichi Nakagawa said.

"If there's something the IMF can do, I want them to do it flexibly. Japan will cooperate with that, including providing funds for it," Nakagawa told reporters in Washington on Thursday.

He was speaking on the eve of a meeting of finance ministers and central bank chiefs from the Group of Seven (G7) rich nations, whose support will be crucial if the plan is to work.

"The impact of the credit crisis is spreading to the world. To minimise the chain-reaction, Japan is ready to take leadership in contributing to support countries by providing funds. And I will call for other countries' cooperation at the G7 meeting tomorrow," Nakagawa said.

The Nikkei newspaper reported that Japan would propose making trillions of dollars in currency reserves held by Asian and Middle Eastern governments available to support IMF-led bailouts.

Japan alone has $995 billion (587 billion pounds) in official foreign currency reserves. China has $2 trillion, the world's largest stockpile.

The Nikkei said the IMF programme would be available to smaller emerging countries but not to members of the G7 -- the United States, Japan, Britain, France, Germany, Canada and Italy -- or to other large nations.

"What the IMF should think about is not G7 or G8 countries, but about contingencies that may arise in newly emerging economies and other areas at this time of financial crisis, credit crunch and the dollar's exchange rate," Economics Minister Kaoru Yosano said in Tokyo.