G20 increases IMF firepower and boosts funds

By Lesley Wroughton

LONDON (Reuters) - The G20 on Thursday tripled the International Monetary Fund's resources, adding $500 billion (340 billion pound) for a total of $750 billion, giving it more firepower and putting it centre stage in the battle against global financial crisis.

A G20 summit of developed and developing countries also agreed to support a general allocation of $250 billion worth of IMF Special Drawing Rights (SDRs) to IMF member countries to boost liquidity at a time when credit markets are frozen.

IMF Managing Director Dominique Strauss-Kahn declared the G20 decision to boost resources and support more economic monitoring by the IMF meant that the Fund would play a bigger role as guardian of the global financial system.

Just a year ago, the IMF was struggling f relevance and respect for failing to sound the alarm on lax oversight and reckless lending by the United States.

Many developing countries also complained that the IMF did not publicly reprimand rich countries for the sort of poor oversight that would probably have drawn stern rebuke, had it taken place in an emerging market.

"The IMF is back," Strauss-Kahn declared. "Today you see the proof," he said, adding that the Fund was back not only as an economic forecaster but also as an institution that provides policy advice and monitors member countries' economies.

The increase in IMF resources includes money from the European Union, Japan, the United States, Canada and Norway. There was no formal breakdown provided of resources and which countries had committed funds.

British Prime Minister Gordon Brown said China would contribute $40 billion to the IMF, but did not say whether Beijing would lend through an IMF-issued SDR bond. Meanwhile, Saudi Arabia said it had not committed funding but was studying options to support the Fund.