September 1, 2009 / 1:39 PM / 11 years ago

EU to mull boosting IMF contribution

BRUSSELS (Reuters) - European Union finance ministers will discuss on Wednesday a French-German proposal to increase Europe’s contribution to IMF funds to $175 billion (108 billion pounds) from $100 billion pledged in March, EU sources said.

The increase is a consequence of leaders of the Group of 20 (G20) industrialised and emerging countries tripling, rather than only doubling as initially expected, the amount of IMF funds to $750 billion at their last summit in April.

“This is not new money, this is international burden-sharing of the money that was agreed in April in London,” one source involved in preparations for the ministers’ meeting said.

A second source confirmed the issue would be discussed by EU finance ministers on Wednesday.

“The U.S. is chipping in $100 billion, Japan is chipping in $100 billion, but the Europeans have by far the largest share in the IMF — around one third. So there is a good reason for aligning our commitment to new IMF resources with the overall share the Europeans have in the fund,” the first source said.

The first source said the $175 billion was “a bit on the high side” and that there were proposals to contribute less. But some opted for more, depending on the method of calculating Europe’s share in the IMF, it said.

“It could be less, it could be more, so under this scenario there is a high probability that this is what it will turn out to be,” the source said.

In a letter released on Monday, the finance ministers of France and Germany said they were ready to increase by two thirds their contributions to the International Monetary Fund’s crisis-fighting war chest.

This would boost Germany’s contribution to the IMF New Arrangements to Borrow (NAB) to 25.03 billion euros and France’s to 18.45 billion euros, reflecting their economic weight.

“We call on our EU partners to join us,” Peer Steinbrueck of Germany and France’s Christine Lagarde wrote in the August 26 letter to Swedish Finance Minister Anders Borg, whose country holds the rotating European Union presidency.

Britain said on Monday it was ready to provide $11 billion in extra funds to the IMF, taking its total contribution to $26 billion.

Reporting by Jan Strupczewski, editing by Dale Hudson

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